Recently we reported on the efforts of the Restaurant Law Center (RLC), an independent public policy organization affiliated with the National Restaurant Association, to invalidate the Dual Jobs Final Rule published by the Department of Labor (DOL). To that end, in early February the RLC filed a motion for preliminary injunction in federal court in Texas to prevent the Final Rule from being enforced. Unfortunately for employers, on February 22, 2022, the court denied the motion. Thus, at least for the time being, the Dual Jobs Final Rule remains in effect.
The Dual Jobs Final Rule, which became effective in late December 2021, establishes limits on the amount of time tipped employees can spend performing work that is not “tip-producing” and still being paid at the reduced cash wage applicable to tipped employees under the Fair Labor Standards Act (FLSA). The new Final Rule revived the 20% (or “80/20”) Rule, with modifications, and added a “30-Minute” Rule, disallowing the tip credit when a tipped employee spends more than thirty continuous minutes performing work that is not considered tip-producing work. The previous administration had attempted to eliminate the 20% Rule.
In denying the RLC’s motion, the court concluded that the current Final Rule is not significantly different from the sub-regulatory guidance that the DOL had been applying for several decades, prior to the previous administration’s attempt to rescind its longstanding position, and further noted that several federal courts of appeal have upheld the validity of that previous guidance. The court also held that the RLC had failed to produce concrete evidence of the damages employers would suffer as a result of the Final Rule, proof of such damages being a necessary component to a motion for preliminary injunction. The RLC is contemplating whether it will file an appeal of the district court’s order. Such an appeal would be heard by the U.S. Court of Appeals for the Fifth Circuit.
Jackson Lewis will continue to monitor and report any further notable updates. In the meantime, employers with tipped employees should ensure that they are in compliance with the requirements of the Dual Jobs Final Rule, keeping in mind that state law may vary on this issue.
If you have any questions about the ruling, the Dual Jobs Final Rule, or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.