Committee adopts amendment tightening state oversight of tip-pooling; bill passes 10-9

The House Labor, Industrial and Rehabilitative Services Committee adopted an amendment and passed House Bill 416 as amended after more than two hours of debate over how tip-pooling should be regulated.

Representative Avalani, the member who presented the amendment, said the changes add references to federal law and tighten definitions: "we added some references to uh further implement part of the FLSA" and the text "remove[s] the word voluntary," so the state Department of Labor can enforce tip-pooling in line with federal guidance. Avalani told members the amendment also explicitly prohibits owners, managers and supervisors from participating in tip pools.

The amendment’s supporters argued the change brings state law into conformity with federal rules and provides a clear enforcement path. Representative Sullivan said the revision "allows our department of labor to enforce the tip pooling process rather than having exclusively the U.S. Department of Labor" and that it "prevents back-of-house sharing" where front-of-house tips would subsidize kitchen staff except where federal law permits. John Garrian, general counsel for the Department of Labor, told the committee the employer can design a policy about who participates, but practical and federal constraints limit per-person opt-outs: "Could an employer ostensibly as part of a policy allow optin and opt out? Sure. I don't think they would do that for the obvious reasons."

Opponents said the change effectively strips workers of control over tips. Representative Cahill said the amendment "takes away that control from the people who earned that money directly from the customer" and urged more study. Multiple members raised operational concerns for small businesses in which owners or managers also occasionally work shifts and collect tips; staff and members explained that payroll classification and shift status determine whether someone is an employee or a supervisor for pooling purposes.

Members also debated carveouts for casino dealers. Garrian and Department staff said crafting a precise statutory carveout for gaming employees was outside their technical expertise, and the chair noted the committee heard dealer testimony but not from casino owners, complicating decisions about a targeted exemption.

After debate the committee moved into executive session. The amendment (identified in the record as 20261830H) was adopted by roll call, 17-2. Later the committee voted that the bill "ought to pass as amended," a motion that carried 10-9.

What changed: the adopted amendment expands statutory references to parts of the Fair Labor Standards Act (FLSA) and related federal guidance, removes the word "voluntary" from the tip-pooling language, and prohibits owners, managers and supervisors from being included in tip pools. The amendment also strikes language about coercion and seeks to give the Department of Labor explicit authority to enforce the state provisions consistent with federal rules.

What remains unresolved: members requested further work on how the law will affect small, owner-operated establishments and whether a targeted carveout for casino dealers is appropriate. Several lawmakers urged an interim study to refine definitions and craft potential exemptions for venues where gratuities are embedded in bills.

The committee adjourned the executive session after recording the final 10-9 vote in favor of the bill as amended.