Department of Labor Issues Opinion Letter Regarding Employees Who Customarily and Regularly Receive Tips

On September 30, 2025, the U.S. Department of Labor (DOL) issued an opinion letter reaffirming its longstanding approach to determining which employees “customarily and regularly” receive tips for purposes of compliance with Fair Labor Standards Act (FLSA). The DOL opined that front-of-house oyster shuckers qualify as “tipped employees” due in part to their interaction with customers who leave tips. 

By way of background, the FLSA permits employers to pay “tipped employees” a cash wage as low as $2.13 per hour and to take a “tip credit” in which tips received by the employee make up the difference needed to achieve the FLSA minimum wage of $7.25 per hour. To qualify as a tipped employee, the employee must be engaged in an occupation in which employees “customarily and regularly” receive tips. Moreover, an employer may require an employee who is subject to the tip credit to contribute tips to a “tip pool” only if that pool is limited to employees engaged in occupations in which employees “customarily and regularly” receive tips.¹

The opinion considered the status of front-of-house oyster shuckers working at an oyster bar where customers could watch them prepare oysters. Although they did not take orders, the oyster shuckers interacted with patrons by explaining oyster offerings, making suggestions, and answering questions. The DOL opined that these employees qualify as “tipped employees” because:

• they worked in view of customers;
• they engaged with patrons by explaining oyster offerings and answering questions; and
• their role was similar to sommeliers, sushi chefs, and teppanyaki chefs, positions historically recognized as tipped occupations.

Conversely, the DOL explained that oyster shuckers who work in the kitchen and who do not have any direct contact with the restaurant’s customers are not “tipped employees” and cannot be included in a tip pool when a tip credit is taken.

This opinion reinforces the DOL’s longstanding position that an employee must engage in service-related functions and have sufficient interaction with the customers who leave tips in order to be considered engaged in a “tipped” occupation for purposes of: (a) taking the tip credit; and (b) inclusion in a tip pool when a tip credit is taken.

Notably, the DOL’s approach is significantly narrower than the Treasury Department’s broad approach to identifying employees who “customarily and regularly” receive tips for purposes of the “no tax on tips” deduction available under the One Big Beautiful Bill Act (OBBBA), which will allow employees engaged in occupations that historically did not qualify for the tip credit under the FLSA (such as dishwashers and cooks) to claim the OBBBA deduction for qualified tips. The Treasury Department explained that it was taking a different approach from the DOL in consideration of the differences in the language, purpose, and history of the FLSA versus the OBBBA. The DOL’s opinion letter did not acknowledge the Treasury Department’s broader interpretation.

Employers that take a tip credit should carefully review the opinion letter and compare their practices with those described in the letter to ensure compliance. Employers should also be aware that even employees who are not engaged in occupations that “customarily and regularly” receive tips for purposes of the FLSA tip credit may nonetheless be engaged in occupations that “customarily and regularly” receive tips for purposes of the OBBBA.