Tips and Tipped Employees

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On January 19, 2021, eight states (Delaware, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, and Pennsylvania), along with the District of Columbia, filed a lawsuit seeking to enjoin the Tip Regulations Final Rule published by the U.S. Department of Labor (DOL) in late December 2020. The Final Rule, which currently is scheduled to become…

Agreeing with the district court, the Court of Appeals for the Fourth Circuit has concluded that the mandatory service charges imposed by a restaurant on dining parties of six or more were not “tips” under the FLSA. However, the Court of Appeals reversed and remanded the trial court’s determination that the FLSA’s “commissioned salesperson” overtime…

Last November, the United States Department of Labor (USDOL) issued Opinion Letter FLSA2018-27, rescinding the so-called “80/20” Tip Credit Rule, a provision that during the last decade had spawned a cottage industry of “80/20” cases.  These cases sought to dissect the duties of a server between those that allegedly generated tips and those that did…

The Department of Labor (“DOL”) today rescinded its prior guidance that made the tip credit unavailable for tipped employees who spend more than 20% of their time performing allegedly non-tip generating duties. The 20% limitation, contained in an internal DOL Field Operations Handbook, spawned numerous so-called “80/20” lawsuits, claiming servers spent too much time performing…

The Restaurant Law Center, a public policy affiliate of the National Restaurant Association, has filed suit against the Department of Labor and its Wage and Hour Division, seeking to declare unlawful the DOL’s 2012 revision to its Field Operations Handbook, purporting to establish, through sub-regulatory guidance, the “80/20” tip credit rule or “20% Rule.” Restaurant…

This week the Department of Labor issued new guidance, in a “Field Assistance Bulletin,” on the recent amendment to the FLSA regarding tip sharing.  The recent amendment to the FLSA (which was included in the omnibus budget bill) bars “supervisors or managers” from retaining tips but expressly allows tipped workers to share tips with non-tipped…

Employers in New York currently are permitted to pay tipped workers a direct cash wage that is below the State minimum wage and take a “credit” for some of the tips received by employees to satisfy the difference between the cash wage paid and the full minimum wage.  For example, in New York City beginning…

In recent years, one significant issue that has plagued industries employing tipped employees is whether the employers must ensure that tipped employees retain all of their tips even if the company is not using the employee’s tips to satisfy part of the minimum wage pursuant to the FLSA’s “tip credit” provision, 29 U.S.C. § 203(m).…

Today the Trump Administration, through the Office of Management and Budget’s Office of Information and Regulatory Affairs, released the federal government’s semi-annual Unified Agenda of Regulatory and Deregulatory Actions. This agenda provides public notice of the regulatory actions the various agencies of the Executive Branch anticipate taking in the coming year. Among the items listed…

While Department of Labor regulations interpreting the FLSA remain the primary source of employer guidance regarding the Act’s requirements, they are not necessarily the final word on what federal wage law requires. This is so even where they have been subject to “notice and comment,” triggering a higher level of judicial deference.  A federal court…