Labor & Employment Law Daily Wrap Up, DOL NEWS—WHD weighs in on questions regarding tip pools and overtime calculations, (Oct 1, 2025)

By Brandi O. Brown, J.D.

As the shutdown loomed, the division posted new letters for the first time since it announced its opinion letter program in June; the last opinion letter posted before this was from early May.

Yesterday, the Department of Labor’s Wage and Hour Division announced publication of several opinion letters offering official written interpretations from the division, explaining how it interprets laws applicable to specific circumstances presented by individuals or organizations. Opinion letters provide official written interpretations from the division, explaining how laws apply to specific factual circumstances presented by individuals or organizations.

In June, Deputy Secretary of Labor Keith Sonderling announced the launch of the department’s new and improved opinion letter program. These letters were the first posted by WHD since early May, however.

Two of the letters cover questions relating to: (1) whether a restaurant employer may include “front-of-house” oyster shuckers in a traditional tip pool; and (2) whether “emergency pay” provided to firefighters and other city employees must be included in the regular rate of pay used to calculate overtime under the FLSA and, if so, how to calculate it.

Front-of-house oyster shuckers in the pool? In FLSA2025-03, WHD responds to a request for an opinion on the inclusion of “front-of-house” oyster shuckers in a restaurant’s tip pool with servers for whom the employer takes an FLSA tip credit under 29 U.S.C. § 203(m)(2)(A). The short answer is, yes, the employer may require employees for whom it takes a tip credit to share tips in a tip pool with the front-of-house oyster shuckers, whom the opinion compares to sommeliers—an occupation DOL has determined to be a customarily and regularly tipped occupation.

The restaurant in question also has shuckers who work in the kitchen and do not interact with customers, and they are not included in the employer’s tip pool. “The common thread in WHD’s guidance, Kilgore [v. Outback Steakhouse of Fla., Inc., 160 F.3d 294 (6th Cir. 1998)] and Montano [v. Montrose Restaurant Associates Inc., 800 F.3d 186 (5th Cir. 2015)],” the opinion letter explains, “is 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.”

“Conversely,” the opinion letter continues, “a dishwasher who occasionally shucks oysters and peels shrimp in a restaurant’s kitchen, absent more, is not an employee that customarily and regularly receives tips because the dishwasher lacks sufficient interaction with the customers who leave tips, a portion of which are subsequently contributed to a tip pool.”

Inclusion of “emergency” pay in overtime calculations. In FLSA2025-04, WHD responds to a firefighter/paramedic’s question regarding whether “emergency pay” provided to the requestor and other firefighters in their city can be excluded from the regular rate of pay when calculating overtime premiums under section 7(e) of the FLSA or, alternatively, how to include this payment in the regular rate.

WHD’s short answer is that, in its opinion, under the circumstances presented and limited to those specific facts, the “emergency pay” is not excludable because the fact and amount of the payment are not within the sole discretion of the employer at or near the end of the work period, and the pay does not otherwise fit within a statutory exclusion. Accordingly, WHD concludes, the employer at issue should include “emergency pay” earned for hours worked within the regular rate for purposes of overtime premium calculations using the method provided in the letter.

Weather-related emergencies. Emergency pay in this scenario is a premium payment of one half the employee’s regular hourly rate of pay for every hour worked during “emergency periods,” which is defined by city policy as periods when, due to a disaster or emergency declaration as defined by the city, only some “designated emergency employees” must work. The employee contended that although the job duties remain substantially the same during those periods, the extreme weather environment makes it more likely to cause physical hardship for the firefighters. They assert that, at least for firefighters, the emergency pay constitutes “hazard pay,” which they claim should be included.

Not a discretionary bonus. WHD explained that the emergency pay did not qualify as a discretionary bonus or any of the other exclusions from regular rate of pay indicated by section 7(e) of the FLSA. “Specifically,” the letter explains, “the policy leaves no discretion as to whether to provide emergency pay during an emergency period when emergency work is performed, nor does it leave discretion regarding the amount of the payment as the amount is set at one half of the employee’s base hourly rate of pay.” Additionally, the fact and amount of the pay are determined well before the work is performed, which is further evidence that it is non-discretionary.

The letter provided an explanation of how to actually conduct the calculation:

“John earns a base hourly rate of $20.00 per hour and works a total of 50 hours in a workweek, 20 hours of which are during emergency pay hours for which he receives a premium of one-half his base hourly rate. His total straight-time earnings would be (50 hours × $20) + (20 hours × $20 × 0.5) = $1,200. His regular rate for the workweek would therefore be ($1,200 ÷ 50 hours) = $24.00. Thus, he would be entitled to an additional $12 for each overtime hour worked ($24 × 0.5), for a total of $120 ($12 × 10 overtime hours), and a grand total of $1,320.”

WHD also agreed that, based on the employee’s representations, the emergency pay did not qualify as an excludable overtime premium. WHD did not address whether the emergency pay would qualify as “hazard pay” because it was unnecessary.

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