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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5112 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 5112
To amend the Fair Labor Standards Act of 1938 to repeal the separate
minimum wage for tipped employees, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 3, 2025
Mrs. Hayes (for herself, Ms. Adams, Ms. Ansari, Ms. Bonamici, Mr.
Carson, Mr. Jackson of Illinois, Ms. Lee of Pennsylvania, Mr. Lieu, Ms.
Salinas, Mr. Thanedar, and Ms. Titus) introduced the following bill;
which was referred to the Committee on Education and Workforce, and in
addition to the Committee on Ways and Means, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend the Fair Labor Standards Act of 1938 to repeal the separate
minimum wage for tipped employees, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tipped Worker Protection Act''.
SEC. 2. SCHEDULED REPEAL OF SEPARATE MINIMUM WAGE FOR TIPPED EMPLOYEES.
(a) In General.--
(1) Repeal.--Section 3(m)(2)(B) of the Fair Labor Standards
Act of 1938 (29 U.S.C. 203(m)(2)(A)), as so redesignated by
section 3(a) and as amended by section 3(b) of this Act, is
amended by striking the sentence beginning with ``In
determining the wage an employer is required to pay a tipped
employee,'' and all that follows through ``of this
subsection.'' and inserting ``The wage required to be paid to a
tipped employee shall be the wage set forth in section
6(a)(1).''.
(2) Conforming amendments.--
(A) Retention of tips.--Section 3(m)(2)(C) of the
Fair Labor Standards Act of 1938 (29 U.S.C.
203(m)(2)(B)), as so redesignated by section 3(a) and
as amended by section 3(c) of this Act, is further
amended in clause (i) of such section 3(m)(2)(C) by
striking ``Regardless of whether or not an employer
takes a tip credit, the employer'' and inserting ``An
employer''.
(B) Status as a tipped employee.--Subsection (t) of
section 3 of the Fair Labor Standards Act of 1938 (29
U.S.C. 203) is repealed.
(C) Penalties.--Section 16 of the Fair Labor
Standards Act of 1938 (29 U.S.C. 216), as amended by
this Act, is further amended--
(i) in subsection (b), by striking ``the
sum of any tip credit taken by the employer and
all such tips unlawfully kept by the employer''
and inserting ``the sum of all such tips
unlawfully used or kept by the employer''; and
(ii) in subsection (c), by striking ``the
sum of any tip credit taken by the employer and
all such tips unlawfully kept by the employer''
and inserting ``the sum of all such tips
unlawfully used or kept by the employer''.
(3) Delayed effective date.--
(A) In general.--Except as provided in subparagraph
(B), the amendments made by paragraphs (1) and (2)
shall take effect with the beginning of the first 1-
year period described in 3(m)(2)(A)(i) of the Fair
Labor Standards Act of 1938 (29 U.S.C.
203(m)(2)(A)(i)), as amended by subsection (b), for
which the hourly wage for such 1-year period would
equal or exceed the minimum wage in effect under
section 6(a)(1) as of the beginning of such 1-year
period.
(B) Special rule for tip pools established or
maintained during transition period.--In any case in
which a system to pool tips is established for the non-
supervisory employees of an employer in accordance with
section 3(m)(2)(D) of such Act (29 U.S.C. 203(m)(2)(D))
(as added by section 3(d) of this Act) prior to the
beginning of the 1-year period described in
subparagraph (A), the amendments made by paragraphs (1)
and (2) shall apply with respect to such employer
beginning with the date on which such system is
established.
(b) Minimum Wage for Tipped Employees During Transition Period.--
(1) In general.--Clause (i) of section 3(m)(2)(B) of the
Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)(2)(A)), as
so redesignated by section 3(a) of this Act, is amended to read
as follows:
``(i) the cash wage paid such employee,
which for purposes of such determination shall
be not less than--
``(I) for the 1-year period
beginning on the date of enactment of
the Tipped Worker Protection Act, $3.60
an hour;
``(II) for each succeeding 1-year
period, an hourly wage equal to the
amount determined under this clause for
the preceding 1-year period increased
by $1.50 (but not to exceed the minimum
wage in effect under section 6(a)(1) as
of the beginning of such 1-year
period); and''.
(2) Definition of tipped employee.--Section 3(t) of such
Act (29 U.S.C. 203(t)) is amended by striking ``he customarily
and regularly receives more than $30 a month in tips'' and
inserting ``the employee customarily and regularly receives for
each month an amount in tips equal to (or in excess of) the
difference between the total cash wages paid to the employee
under subsection (m)(2)(A)(i) for such month and the total
wages that would have been paid to the employee for the hours
worked in such month pursuant to the minimum wage in effect
under section 6(a)(1) but for subsection (m)(2), except that an
employee shall not be considered a `tipped employee' for any
workweek in which the employee spends more than 20 percent of
the employee's hours of employment performing duties related to
the employee's occupation for which the employee does not
directly receive tips''.
SEC. 3. REQUIREMENTS RELATING TO RETENTION AND POOLING OF TIPS.
(a) Treatment of Certain Amounts as Tips.--Section 3(m)(2) of the
Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)(2)) is amended--
(1) by redesignating subparagraphs (A) and (B) as
subparagraphs (B) and (C), respectively; and
(2) by inserting before subparagraph (A), as so
redesignated, the following:
``(A) `Tip' includes any discretionary amount paid directly to an
employee by a customer and any portion of a mandatory charge imposed on
a customer by the employer which is added to the cost of the product or
service in any manner that may reasonably lead the customer to believe
that the amount collected by the employer from such charge will be paid
in full directly to the employee.''.
(b) All Tips Retained by Employees.--Subparagraph (B) of section
3(m)(2) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)(2)),
as redesignated by subsection (a), is amended by striking ``of this
subsection'' and all that follows through the end of the subparagraph
and inserting ``of this subsection. Any employee shall have the right
to retain, regardless of whether received as part of a system to pool
tips established in accordance with subparagraph (C), any tips received
by such employee.''.
(c) No Tips Retained by Employers.--Subparagraph (C) of section
3(m)(2)(C) of the Fair Labor Standards Act of 1938 (29 U.S.C.
203(m)(2)), as redesignated by subsection (b), is amended to read as
follows:
``(C)(i) Regardless of whether or not an employer takes a tip
credit, the employer may not keep tips received by its employees for
any purpose or use such tips for any purpose other than to facilitate
the distribution to employees of the full amount of all such tips under
a system to pool tips established in accordance with subparagraph (D).
``(ii) A violation of clause (i) includes--
``(I) allowing managers or supervisors to keep or use any
portion of employees' tips; and
``(II) keeping or using any portion of employees' tips to
cover the cost of financial transaction fees, including any fee
established, charged, or received by a payment card network for
the purpose of compensating an issuer for its involvement in a
transaction in which a person uses a debit card or credit card
(as the terms ``debit card'', ``credit card'', ``issuer'', and
``payment card network'' are defined in section 921(c) of the
Electronic Fund Transfer Act (15 U.S.C. 1693o-2(c)))''.
(d) Tip Pools.--Section 3(m)(2) of the Fair Labor Standards Act of
1938 (29 U.S.C. 203(m)(2)), as amended by this section, is further
amended by adding at the end the following:
``(D)(i) In any case in which an employer is provided with written
documentation demonstrating that not less than 30 percent of all of the
non-supervisory employees of the employer request a vote on whether to
establish or modify a system to pool tips in accordance with this
subparagraph, such a system shall be considered to be so established or
modified if the employer is provided with written documentation
demonstrating that not less than 51 percent of all such employees vote
in favor of establishing or modifying such a system.
``(ii) The employer shall maintain a written record of any vote to
establish or modify a system to pool tips held pursuant to this
subparagraph, including the name of each employee voting and the vote
totals. The employer shall provide a copy of such record to any
employee upon request.
``(iii)(I) A system to pool tips established under this
subparagraph shall be administered by the employer, at the employer's
expense, in a manner ensuring that--
``(aa) participation in the system is voluntary for each
employee and determined without coercion from the employer;
``(bb) such tips are shared among all non-supervisory
employees participating in such system;
``(cc) funds held in such system are maintained separately
from any other funds; and
``(dd) the records of such system are available to be
examined by each such participating employee.
``(II) In administering a system to pool tips established under
this subparagraph, an employer may suggest reasonable and customary
practices.
``(III) In any dispute among employees relating to the
administration of a system to pool tips established under this
subparagraph, the employer may mediate and impose a resolution of the
dispute on the employees participating in the system only if--
``(aa) in the case of employees in a restaurant or similar
retail food establishment, no agreement resolving the dispute
can be reached among--
``(AA) 50 percent or more of the participating
service employees whose primary job duties include
direct interaction with customers; and
``(BB) 50 percent or more of all other
participating employees; and
``(bb) in the case of employees in any other establishment,
no agreement resolving the dispute can be reached among 50
percent or more of the participating employees.
``(iv) An employer shall not be required to compensate any employee
participating in a system to pool tips established under this
subparagraph in any case arising as a result of another participating
employee withholding tips from such system.
``(v) An employer shall not discharge an employee or otherwise
discriminate against an employee based on the employee's vote with
respect to, or participation in, a system to pool tips established
under this subparagraph.
``(vi) In this subparagraph, the term `non-supervisory employee'
means any employee who has, at any point in their typical duties,
decision making authority over the scheduling of other employees, the
hiring of other employees, or the termination of other employees.''.
(e) Service Charges.--Section 3(m)(2) of the Fair Labor Standards
Act of 1938 (29 U.S.C. 203(m)(2)), as amended by this section, is
further amended by adding at the end the following:
``(E)(i) In any case in which an employer imposes a mandatory
charge on a customer which is added to the cost of the product or
service, the employer shall--
``(I) disclose to the customer and to all employees
involved in the sale of such product or delivery of such
service--
``(aa) the reason for such charge; and
``(bb) the portion of such charge, if any, which
upon its collection will be paid in full by the
employer directly to employees; and
``(II) promptly pay to employees upon collection of such
charge any portion identified in the disclosure required under
subclause (I)(bb).
``(ii) In any case in which an employer represents that a charge is
payable at the discretion of the customer, the employer may not add
such charge to the cost of any product or service unless first
requested by the customer.''.
(f) Penalties.--Section 16(e)(2) of the Fair Labor Standards Act of
1938 (29 U.S.C. 216(e)(2)) is amended--
(1) by striking ``section 3(m)(2)(B)'' and inserting ``any
provision of section 3(m)(2)''; and
(2) by inserting ``or used'' after ``kept''.
(g) Effective Date.--The amendments made by this section shall take
effect on the date of enactment of this Act and shall apply with
respect to all tips received on or after such date.
SEC. 4. SERVICE CHARGES TREATED AS TIPS FOR PURPOSES OF EMPLOYER CREDIT
FOR SOCIAL SECURITY TAXES, ETC.
(a) In General.--Section 3121(q) of the Internal Revenue Code of
1986 is amended by adding at the end the following: ``In the case of
any mandatory charge to which section 3(m)(2)(E) of the Fair Labor
Standards Act applies, the portion of such charge described in
subclause (I)(bb) of such section shall be treated as tips for purposes
of this subsection.''.
(b) Effective Date.--The amendment made by this section shall apply
to amounts received on or after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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