DOL returns to outdated definition of tipped employees – Tech Cyber Web

On December 17, 2024, the U.S. Division of Labor (DOL) rescinded its laws that tried to restrict the proportion of labor time and consecutive minutes tipped staff may spend on non-tip-producing work for functions of tip credit underneath the federal Honest Labor Requirements Act (FLSA). The DOL’s motion was in response to a choice by the Fifth Circuit Court docket of Appeals. The court docket had struck down the DOL’s 2021 laws that stated if a tipped employee spent greater than 20 p.c of their time (the “80/20 rule”) or greater than 30 consecutive minutes on duties that didn’t produce suggestions, employers couldn’t apply the FLSA tip credit score towards minimal wage necessities throughout that extra time (Restaurant Regulation Middle v. U.S. Division of Labor5^th Cir, Oct. 2024).

Ideas (i.e., recommendation!): In case you make use of tipped employees, we advocate you retain these provisions in thoughts:

Tipped worker: The FLSA defines this as “any worker engaged in an occupation by which” the worker “usually and commonly receives greater than $30 a month in suggestions.” Typical examples are restaurant servers and supply drivers.

Tip credit score: The tip credit score is an possibility underneath the FLSA that enables employers to pay as little as $2.13 per hour to tipped staff so long as they earn sufficient tricks to attain the federal minimal wage of $7.25 per hour. Nonetheless, some states, together with California, Montana, Oregonand Washingtondon’t enable employers to use any type of tip credit score to cut back the relevant minimal wage. As well as, many state and native minimal wages are increased than the federal quantity. The DOL presents a chart exhibiting minimal wage necessities for tipped staff in all 50 states.

Twin jobs: The DOL’s laws at 29 CFR 531.56 clarify that if an worker works in two really totally different jobs for a similar employer, resembling constructing upkeep and desk server, a tip credit score underneath the FLSA can solely be utilized to the desk server job. It is not uncommon for a tipped job to incorporate associated duties that don’t immediately produce suggestions (resembling when a server wipes down tables or briefly pitches in with meals preparation). The revised guidelines make it clear that these associated duties don’t should be picked aside and timed individually—all the occupation is taken into account as an entire in figuring out whether or not the employee is a tipped worker.

Tip pooling: Staff might voluntarily agree to separate or pool their suggestions, and an employer might facilitate this association. Nonetheless, solely employers that don’t take a tip credit score might require tipped staff to pool their suggestions with non-management employees who wouldn’t ordinarily obtain suggestions, resembling dishwashers or different “again of the home” employees. All employers, no matter whether or not they take a tip credit score, are forbidden from taking employees’ suggestions to provide them to the employer or to supervisors or managers. The DOL’s laws clarify these prohibitions at 29 CFR 531.52 and 29 CFR 531.54.