On March 23, 2023, Utah Governor Spencer Cox signed into law Senate Bill 73 (“SB 73”) expanding the group of employees eligible for tip pooling by allowing employers to include non-tipped employees in a bona fide tip pooling or sharing arrangement.
Historically, only “tipped employees” were permitted to participate in a tip pooling or sharing arrangement under Utah State law. This form of tip pooling is also allowed under federal law and is otherwise known as a traditional tip pool. A “tipped employee” is one who customarily and regularly receives tips or gratuities.”[1] Common examples of tipped employees include waiters and waitresses, whereas dishwashers, chefs, cooks, and janitors are examples of non-tipped employees.
Tipped employees typically retain all tips and gratuities they receive directly; however, alternatively, they may participate in a bona fide tip pooling or sharing arrangement with other tipped employees.[2] A bona fide tip pooling or sharing arrangement is where an employer mandates that tips be pooled and divided or shared among those who customarily and regularly receive tips.[3]
With the passage of SB 73, businesses may now effectively permit non-tipped employees to participate in a tip pooling or sharing arrangement with tipped employees, potentially resulting in tips received by tipped employees being shared among a larger number of employees (both tipped and non-tipped employees).
SB 73 reflects the same change previously made under federal law....
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