Tipped Worker Protection Act

Bill Number

H.R. 5112

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Labor and Employment

Status

Introduced

Latest Action

2025-09-03: 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.

Last Updated

2026-06-11T04:11:23Z

AI-Generated Summary

Purpose of the Legislation

The Tipped Worker Protection Act (H.R. 5112) aims to protect tipped workers—such as servers and bartenders—by gradually eliminating the lower minimum wage for these employees under the Fair Labor Standards Act (FLSA) of 1938. It ensures tipped workers receive the full federal minimum wage from their employers, while strengthening rules on tip retention, pooling, and disclosure to prevent employer misuse of tips.

Key Provisions

• Phased Increase in Cash Wage for Tipped Employees:
• Starts at $3.60 per hour on the date of enactment.
• Increases by $1.50 per hour each year until it equals the full federal minimum wage under FLSA Section 6(a)(1).
• Full repeal of the separate "tip credit" (where employers pay less than minimum wage if tips make up the difference) occurs when the phased wage reaches the full minimum.

• Definition of Tipped Employee:
• An employee who regularly receives tips covering the gap between their cash wage and the full minimum wage.
• Excludes weeks where more than 20% of hours are spent on non-tipped duties (e.g., cleaning or setup without direct customer tips).

• Tip Retention and Employer Restrictions:
• All tips belong to employees; employers cannot keep, use, or share them with managers/supervisors for any purpose, including covering credit card fees.
• Includes mandatory service charges if customers reasonably believe they go to employees—these must be treated and distributed as tips.

• Tip Pooling System:
• Allowed only if at least 30% of non-supervisory employees request a vote, and 51% approve in writing.
• Voluntary participation; pools share tips only among non-supervisory employees (those without authority to hire, fire, or schedule others).
• Employer administers at their expense, maintains separate records, and mediates disputes only if employees cannot agree (requiring majority input from service staff in restaurants).
• Protects against retaliation for voting or participating.

• Service Charge Disclosure:
• Employers must inform customers and employees of the reason for any mandatory charge and the exact portion (if any) going directly to employees.
• Prompt payment of the employee portion upon collection.
• "Discretionary" charges cannot be added without customer request.

• Penalties and Enforcement:
• Updates FLSA penalties for tip violations, removing references to tip credits and focusing on unlawful keeping or use of tips.
• Applies to all tips received after enactment.

• Tax Treatment:
• Portions of mandatory service charges going to employees are treated as tips for Social Security tax credits under the Internal Revenue Code.

• Effective Dates:
• Tip retention and pooling rules take effect immediately upon enactment.
• Wage phase-in and full repeal begin on enactment, with repeal delayed until the phased wage matches the minimum wage.
• Special rule: If tip pooling starts during transition, full minimum wage applies immediately for that employer.

Significant Changes to Existing Law

• Repeal of Tip Credit: Ends the long-standing FLSA provision allowing employers to pay tipped workers a base wage as low as $2.13/hour (with tips covering the rest to reach minimum wage). Replaces it with a gradual ramp-up to full minimum wage.
• Expanded Tip Definition: Broadens "tips" to include certain mandatory charges, closing loopholes where employers retained service fees.
• Employee-Controlled Tip Pools: Introduces a democratic voting process for pools, limiting them to non-supervisory staff and prohibiting employer coercion—unlike current rules allowing broader employer discretion.
• Stricter Employer Bans: Explicitly prohibits using tips for operational costs (e.g., fees) and strengthens anti-retaliation protections.
• Redefined Tipped Status: Ties eligibility to actual tip amounts covering the wage gap and limits non-tipped work, reducing abuse where workers are misclassified.

Potential Impacts

• On Government Agencies: The Department of Labor (DOL) will need to enforce new wage phase-ins, tip pooling records, and disclosures, potentially increasing oversight and investigations in tipped industries. The IRS will adjust Social Security tax reporting for service charges treated as tips.
• On Citizens (Workers and Consumers): Tipped workers gain higher guaranteed pay, reducing reliance on variable tips and potential wage theft, but may face adjusted tip expectations. Consumers could see menu prices rise as employers cover higher labor costs, though clearer service charge rules promote transparency.
• On International Relations: Minimal direct impact, though it may influence U.S. labor standards discussions in trade agreements emphasizing worker protections.

Main Stakeholders Affected

• Tipped Workers: Primary beneficiaries, including servers, bartenders, and delivery staff in restaurants, hotels, and similar venues—gaining stable wages and tip protections.
• Employers in Tipped Industries: Restaurants, bars, and hospitality businesses face higher payroll costs and compliance burdens (e.g., voting processes, record-keeping), potentially leading to operational changes like price adjustments.
• Unions and Advocacy Groups: Labor organizations (e.g., those representing service workers) likely support it for enhancing worker rights.
• Customers: Affected indirectly through potential price increases and better disclosure on charges.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens FLSA enforcement by clarifying tip ownership and introducing voting mechanisms, which could lead to more lawsuits over violations (e.g., under updated penalty sections). May require DOL rulemaking for implementation details.
• Constitutional: Aligns with Equal Protection and Due Process by ensuring fair wages without arbitrary employer advantages; no apparent free speech or property rights conflicts, though employer administration of pools must avoid coercion to prevent First Amendment challenges.
• Political: Advances progressive labor reforms by addressing income inequality in low-wage sectors, but could spark debate over business costs in a divided Congress. Referred to Education and Workforce and Ways and Means Committees, indicating bipartisan scrutiny on economic effects.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Hayes, Jahana [D-CT-5]

Cosponsors (11)

Rep. Adams, Alma S. [D-NC-12], Rep. Ansari, Yassamin [D-AZ-3], Rep. Bonamici, Suzanne [D-OR-1], Rep. Carson, André [D-IN-7], Rep. Jackson, Jonathan L. [D-IL-1], Rep. Lee, Summer L. [D-PA-12], Rep. Lieu, Ted [D-CA-36], Rep. Salinas, Andrea [D-OR-6], Rep. Thanedar, Shri [D-MI-13], Rep. Titus, Dina [D-NV-1], Rep. Randall, Emily [D-WA-6]

Recent Actions

• 2025-09-03: 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.
• 2025-09-03: 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.
• 2025-09-03: Introduced in House
• 2025-09-03: Introduced in House

Bill Versions

• Tipped Worker Protection Act — issued 2025-09-03 — PDF (12 pages)