Nicole Gonzalez
Tue, 11/02/2021
The U.S. Department of Labor published a final rule on Thursday, reinstating its policy of limiting when an employer may count the tips of its tipped employees toward its minimum wage obligations under the federal Fair Labor Standards Act (FLSA). Under the FLSA, “tipped employees” are those who customarily and regularly receive more than $30 per month in tips. The FLSA permits qualifying employers to take a “tip credit” for such employees equal to the difference between the required tipped cash wage (which must be at least $2.13) and the federal minimum wage of $7.25 (for a maximum tip credit of $5.12 per hour).
Before a 2020 rule expanding employers’ ability to claim the tip credit, DOL had an “80/20” policy that when tipped workers, such as those in the restaurant, hospitality, and service industries, spend 20% or more of their workweek performing non-tipped duties—e.g., rolling silverware into napkins, sweeping the floor at a nail salon—they were entitled to the full minimum wage of $7.25 an hour for that work, rather than the lower tipped wage of $2.13. The policy triggered a wave of lawsuits demanding backpay for such “side work” on the grounds that employees should be paid the full minimum wage for work that does not involve serving customers. In 2020, DOL responded to the litigation with its business-friendly regulations, but the rule was paused before it could take effect in April 2021.
The Dual Jobs final rule, which becomes effective on December 28, 2021, withdraws and modifies portions of the 2020 regulations, including resurrecting the 80/20 principle. It also provides that tipped workers are owed the full minimum wage when performing untipped side work for at least 30 continuous minutes, regardless of weekly hours.
Although there is pushback from employers in the affected industries, this is the first time the renewed policy has gone through the rule-making notice and comment process, making it more likely to be enforced in the courts.
If you believe that your employer has failed to properly compensate you, contact MSE at info@mselaborlaw.com.
