HB85, titled the Small Business Flexibility Act, would amend the Fair Labor Standards Act to expand how employers may structure tip pools. Under current law, tip pooling is generally limited to employees who customarily and regularly receive tips. This bill would allow tip pools to include both traditional tipped employees and certain non-tipped employees, so long as the tipped employees included in the pool are paid at least the full federal minimum wage in cash wages by the employer.
The bill’s practical effect would be to give restaurants and other tipped-workplace employers more flexibility in distributing tips among staff. It would revise the federal wage-and-hour statute to create a broader category of permissible tip pools, potentially affecting how employers compensate front-of-house and back-of-house workers and how tips are shared across job classifications. Because it amends the Fair Labor Standards Act, it would directly affect employers, tipped workers, and enforcement of federal labor standards.
Impact
If enacted, HB85 would amend Section 3(m)(2) of the Fair Labor Standards Act of 1938 to broaden lawful tip pooling arrangements. The change would permit tip pools that include employees who do not customarily and regularly receive tips, provided certain tipped employees in the pool are paid at least the federal minimum wage in cash wages. This would alter federal wage-and-hour rules for employers that use tips as part of employee compensation, especially in the hospitality and food service sectors.
Sentiment
There is limited recorded discussion or voting history for the bill, so overall sentiment cannot be measured from committee debate. The bill’s title and structure suggest a pro-business framing focused on flexibility for employers, while also potentially appealing to some workers and employers who favor broader tip-sharing arrangements. Because no votes or transcripts are available, there is no documented committee consensus or opposition in the provided materials.
Contention
The main point of contention is likely whether tip pools should be expanded to include non-tipped employees. Supporters would view the bill as increasing flexibility and allowing employers to distribute tips more broadly among staff, while critics may argue it could dilute tips for traditionally tipped workers or weaken existing protections around gratuities. Another likely issue is whether the bill shifts compensation practices in ways that benefit employers more than workers, particularly in restaurants and other service industries.
Small Business Flexibility ActThis bill provides statutory authority for the pooling of tips among two pools of employees. The first pool consists of employees who customarily and regularly receive tips (as is permitted under the current statute). The second pool consists of (1) employees who customarily and regularly receive tips and are paid at least minimum wage, and (2) employees who do not customarily and regularly receive tips.