Hunton Employment & Labor Perspectives

On September 30, 2025, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued opinion letters addressing issues relating to tip pooling, joint employment, and regular rate of pay calculation under the Fair Labor Standards Act (FLSA).  

Opinion letters are official written opinions by the WHD explaining how the FLSA and other laws apply to specific workplace situations.  Opinion letters are not binding authority but provide persuasive guidance and insight into the agency’s positions and priorities.  Although the practice of issuing opinion letters dates back to the 1930s, the level of activity of the program has historically varied depending on the administration in power.  In 2017, after a hiatus during the Obama administration, the DOL reinstated the opinion letter program, ultimately publishing 80 opinion letters during the first Trump Administration.  The practice fell out of favor again under President Biden.  In June, Deputy Secretary of Labor Keith Sonderling announced the relaunch and expansion of the DOL’s opinion letter program.  The September 30 letters, authored by WHD Acting Administrator James Macy, are the agency’s first batch of opinion letters since the announcement.

“Horizontal” Joint Employment

In FLSA 2025-05, the WHD considered whether a hostess who worked for a hotel restaurant and a members-only club located on the restaurant’s second floor was jointly employed by both establishments.  The hostess was employed by the restaurant at the rate of $28.00 per hour and was offered shifts at the members club at the same rate of pay.  The hostess would occasionally work at the members club while being “clocked in” at the restaurant.  The DOL concluded that the hostess was jointly employed by the restaurant and club, meaning all hours worked at both locations in a single workweek must be combined for FLSA purposes, and both entities would be jointly and severally liable for any unpaid wages under the FLSA.

Although the restaurant and club used different payroll and timekeeping systems and purportedly were separate legal entities, the DOL found the establishments were sufficiently associated with each other with respect to the hostess’s employment to demonstrate a horizontal joint-employment relationship.  The DOL noted several indicators of joint employment, including (a) the operational integration of the restaurant and club (including their physical proximity, common kitchen, and similar menus), (b) the seeming coordination of rates of pay and work schedules between the two facilities, and (c) common management support. 

Tip Pooling and “Customarily and Regularly” Tipped Employees

The WHD in FLSA 2025-3 was asked whether an employer may include front-of-house oyster shuckers in a restaurant’s tip pool with servers paid with a tip credit.  The FLSA permits an employer to satisfy a portion of its minimum wage obligation for tipped employees by taking a tip credit equal to the difference between the required direct wage (which must be at least $2.13 per hour) and the federal minimum wage (currently $7.25 per hour). Employers may require an employee for whom the employer takes a tip credit to contribute to a tip pool only if the pool is limited to employees who “customarily and regularly receive tips.” The letter explains that “to be an individual who customarily and regularly receives tips, an employee must engage in service-related functions and have sufficient interaction with the customers who leave tips, a portion of which are subsequently contributed to a tip pool.” 

The DOL analyzed the job duties of the front-of-house oyster shuckers and concluded that they were employees that customarily and regularly receive tips, and therefore the employer could require servers, for whom the employer takes a tip credit, to share tips in a pool with them. The DOL analogized the shuckers to sommeliers and sushi chefs, who have long been regarding as employees who customarily and regularly receive tips.  Shuckers directly serviced customers by detailing oyster offerings, making suggestions regarding the offerings, and answering questions about the offerings, similar to how sommeliers explain the wine list to customers.  Shuckers also prepared and served oysters in plain view of customers, like front-of-house sushi chefs. 

“Emergency Pay” and Regular Rate of Pay for Overtime

Finally, in FLSA 2025-4, the DOL addressed whether “emergency pay” provided to firefighters for hours worked during officially-declared emergencies should be included in the regular rate when calculating overtime.  The city had a written policy through which firefighters were paid a premium payment for every hour worked during an “emergency period.” 

The regular rate of pay for overtime purposes includes “all remuneration for employment,” subject to certain statutory exclusions.  The DOL determined that the payment was not excludable as a discretionary bonus and did not fall under any other exclusion.  For a payment to qualify as an excludable discretionary bonus, three conditions are required: (1) the fact and amount of the payment must be “determined at the sole discretion of the employer”; (2) the employer’s determination must occur “at or near the end of the period” when the employee’s work was performed; and (3) the payment must not be made pursuant to “any prior contract, agreement, or promise” causing employees to expect such payments regularly.  The DOL explained that even if the written policy was not a “prior contract, agreement, or promise,” the first two conditions were not satisfied because the policy left no discretion as to whether to provide emergency pay when work is performed, and the fact and amount of pay were determined well before the work is performed.  Thus, the “emergency pay” must be included in the employees’ regular rate used to calculate the proper overtime rate.   

Takeaways

Although these opinions do not reflect significant policy or interpretive changes, employers should expect a steady flow of opinion letters from the WHD over the next three years.  The agency’s priorities should also become more clear with the recent confirmation of Andrew Rogers as WHD Administrator.  Notably, employers should not necessarily expect a wave of pro-employer opinions under this administration.  Two of the three opinions discussed in this post were sought by employees, and the DOL sided with the employee in both cases.