New WHD Opinion Letters Clarify Tip Pooling Rules and Joint Employer Liability

On September 30, 2025, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued four new opinion letters under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act. Two of these opinions, FLSA2025-03 (tip pooling for oyster shuckers) and FLSA2025-05 (joint employer liability), carry particular weight for restaurants, hospitality groups, and businesses that operate multiple related entities.

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Tip Pooling and “Front-of-House” Oyster Shuckers (FLSA2025-03)

The issue

Restaurants often rely on tip pools to distribute gratuities among service staff. Section 3(m)(2)(A) of the FLSA allows an employer taking a tip credit to include only those employees who “customarily and regularly receive tips.” The question raised was whether oyster shuckers who prepare oysters in view of customers can be lawfully included in such a pool.

WHD’s conclusion

• Front-of-house shuckers: Qualify as tipped employees because they directly interact with patrons and perform a visible service that generates tips.

• Back-of-house shuckers: Do not qualify because they lack customer interaction, even if their work supports tipped servers.

Why it matters in Florida

Florida employers must also comply with the state minimum wage, which as of September 30, 2025 is 14.00 dollars per hour, with a tipped cash wage of 10.98 dollars. Even when a tip pool is structured lawfully under federal law, it must be reconciled with Florida’s higher wage floor. Restaurants should review written policies, confirm which roles qualify, and ensure payroll systems are aligned.

Risk point: Improper inclusion of back-of-house workers in a tip pool while taking a tip credit can result in liability for all tips distributed plus back wages for minimum wage violations.

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Joint Employer Liability for Affiliated Businesses (FLSA2025-05)

The issue

Two entities operated side by side, shared ownership and management, maintained similar menus, used a shared kitchen, and allowed employees to clock in at one location and work at the other. The question was whether they were jointly and severally liable under the FLSA.

WHD’s conclusion

These were horizontal joint employers. The combination of common ownership, overlapping managers, integrated operations, and fluid scheduling meant that the two businesses were not truly separate for wage and hour purposes. The result is that employee hours must be aggregated for overtime calculations, and both entities are jointly responsible for compliance.

Practical implications

• Restaurants, bars, and hospitality groups often operate under multiple LLCs for tax, liability, or branding reasons. This letter makes clear that corporate structure will not shield related entities if their day-to-day operations are functionally combined.

• Payroll systems must be set up to recognize shared employees across entities. Failure to aggregate hours exposes both businesses to overtime liability.

• Franchise groups and multi-location operators should carefully examine scheduling practices, management overlap, and ownership disclosures to determine whether WHD would treat them as joint employers.

Risk point: Treating affiliated locations as separate without combining hours can lead to overtime violations, liquidated damages, and exposure for both entities.

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Employer Takeaways

1. Audit tip pools carefully. Only include employees with direct, customer-facing duties that generate tips. Keep written policies current, train managers, and verify compliance with both federal law and Florida’s higher tipped wage requirements.

2. Evaluate ownership and operational ties. If your entities share ownership, management, or day-to-day operations, assume WHD will treat them as joint employers. Payroll, scheduling, and recordkeeping should reflect that reality.

3. Document decision-making. If you rely on these opinion letters in good faith, you can establish a defense under the Portal-to-Portal Act, 29 U.S.C. § 259. That makes compliance review now a risk-reducing investment.