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A recent federal court decision involving Chili’s and its tipping practices points to courts’ willingness to allow employee challenges to employer tip pool practices to proceed past motions to dismiss. It also signals courts’ deference to the Department of Labor’s (DOL) interpretation of the Fair Labor Standards Act (FLSA) and related regulations concerning tip pools. Ultimately, the case shows that employers face the risk of having to defend against a lawsuit or enforcement action when the employer requires tipped employees to regularly perform nontipped work, either related or unrelated to the employees’ tipped job duties, but pays the employees below minimum wage and takes a tip credit for all work performed, regardless of whether the work is tipped or nontipped.

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