Total Articles: 23
Justices Deny Review of Applebee's Tip Credit Ruling
In May, my partner Staci reported on a ruling against Applebee's by the 8th Circuit Court of Appeals, holding that tipped employees who spent more than 20 percent of their working time on nontipped activities like cleaning restrooms were entitled to the federal minimum wage of $7.25 per hour. Applebee's asked the U.S. Supreme Court to review the ruling, arguing that the Eighth Circuit incorrectly deferred to the U.S. Department of Labor's "informal interpretation" of its FLSA regulations in its 1988 Field Operations Handbook, and that as a result it applied an "utterly unworkable standard that has no basis in the text or purpose of the FLSA and that will impose crushing administrative and financial burdens on restaurants and other employers of tipped employees." Last week, the Supreme Court turned down Applebee's petition, leaving the Court of Appeals' ruling intact.
Supreme Court Refuses "Tip Credit" Appeal
In a move that could have a significant impact on employers with tipped employees, the Supreme Court rejected an appeal over "tip credit" practices.
The Future of Tip Credit – And The Businesses That Depend Upon It
The U.S. Supreme Court is being asked to decide what amounts to the future of tip credit for many businesses – particularly in the hospitality industry. In short, the issue is whether an employer can continue to pay tip credit employees on a tip credit basis if they spend more than 20% of their work time on duties that did not produce tips.
Is Your "Tip Credit" A Time Bomb?
Section 3(m) of the federal Fair Labor Standards Act allows a portion of the employee's FLSA-required minimum wages to consist of tips. Unfortunately, it is all-too-common for employers to make expensive mistakes where tips are concerned.
Wage and Hour Division Issues New Regulations Affecting Tip Credits
New regulations issued by the Wage and Hour Division of the Department of Labor (DOL) interpreting the Fair Labor Standards Act (FLSA) recently went into effect; but the National Restaurant Association (NRA) and other industry groups are challenging the regulations.
Application of the Tip Credit and Potential Retaliation Implications
The Fair Labor Standards Act (FLSA) generally requires employers to pay a specified minimum wage to its employees and overtime for all hours worked over 40 in a work week. For restaurants and other hospitality-oriented businesses, the FLSA permits employers to pay a minimum wage of $2.13 per hour to employees engaged in a tipped occupation as long as the employees’ tips make up the difference between the $2.13 hourly wage and the current minimum wage, which is $7.25 per hour.
Restaurant Association Sues to Block Tip Credit Rules
On April 5, 2011, the U.S. Department of Labor published new final regulations that among other things require employers to give new detailed notices to tipped employees in order to credit tips toward the minimum wage. The new regulations took effect on June 5, 2011. Yesterday, June 16, 2011, the National Restaurant Association, the Council of State Restaurant Associations and the National Federation of Independent Businesses filed a lawsuit against the DOLseeking to block enforcement of the new rules. National Restaurant Association v Solis (PDF).
DOL's New Tip-Credit Interpretations
The federal Fair Labor Standards Act's "tip credit" was among the many topics addressed by the U.S. Labor Department's recent final rule. DOL's tip-related pronouncements are a mixed-bag for employers.
Reminder - DOL's "Tip Credit" Notice Requirement Took Effect Yesterday.
Employers who use the FLSA's "tip credit" provision should be aware that the Department of Labor's new notice requirements for the use of the tip credit take effect today, May 5, 2011.
USDOL Changes Tip-Credit Interpretations
The federal Fair Labor Standards Act's "tip credit" was among the many topics addressed by the U.S. Labor Department's recent Final Rule. DOL's tip-related pronouncements are a mixed-bag for employers.
Department of Labor Revises Tip Credit Rule, Articulates New Policy View on Fluctuating Workweek
The U.S. Department of Labor has issued a final rule on the use of the tip credit under Section 3(m) of the Fair Labor Standards Act. In addition to updating the amount allowed, the final rule will require employers to provide employees with additional information before taking a tip credit. The new rule will become effective on May 5, 2011.
Department of Labor Clarifies "Tip Credit" Regulations
On April 5, 2011 the Department of Labor issued final regulations impacting an employer's use of a "tip credit" for tipped employees.
Bill Would Compel Higher Cash Wages For Tipped Employees
A bill introduced recently by U.S. Representative Donna Edwards (D. Md.) would amend the federal Fair Labor Standards Act to require many employers to boost their direct cash payments to tipped employees by 76% within 90 days after passage, even though these employees are already receiving (by law) at least the FLSA minimum wage in combined tips and cash wages. A year later, the cash-wage requirement would be $5.00 (135% higher than the current level). In two years, the figure would increase to $5.50 (158% higher than today) or 70% of the FLSA minimum wage, whichever is more. H.R. 631 would be known as the WAGES Act ("Working for Adequate Gains for Employment in Services").
Are Your Tipped Employees Doing Tipped Work?
The wage and hour laws are outdated and compliance is exceedingly difficult in light of the way in which most hotels and restaurants are required to operate. But, you already knew these facts. Recent tip credit and tip pooling cases continue to highlight the problems and we will be addressing tipped employee issues in this and future editions of the Hospitality eAuthority.
Are You Vulnerable to a Tip-Pooling Claim?
Employers increasingly face litigation under the wage and hour provisions of federal and state law, which include minimum wage, overtime pay, and equal pay requirements. A recent California decision may give plaintiffs’ lawyers yet another wage and hour issue to seize upon: tip-pooling.
Hospitality Labor Letter: Sailing Away With the Tips.
Cutting into potential profits, New York's highest court rules that restaurants may not pocket mandatory service charges that are represented to customers as gratuities for the wait staff.
Implications in Applebee's Case Still Worrying the [Hospitality] Industry.
In our October/November issue, we reported on a troubling interim decision by a federal district court judge in Missouri. The case involved pay for bartender Gerald Fast, and focused on two issues: whether the restaurant's automated timekeeping resulted in off-the-clock work (referred to as "Appletime"); and whether the restaurant unlawfully applied the federal tip credit to non-tipped work the bartender was required to do, in addition to his other duties.
Pay for “Tipped Employees” Under the Florida Minimum Wage Act.
Most Florida employers are aware that the Florida Minimum Wage Act imposes a higher minimum wage than is required by the federal Fair Labor Standards Act. As discussed in our January 3, 2008 Legal Alert, the state minimum wage increased on January 1 to $6.79 per hour (up from $6.67 per hour in 2007). This rate is higher than the current federal minimum wage rate of $5.85 per hour.
Is $2.13 An Hour Enough? Higher State Minimum Wage Rates Impact Tip Credit.
With employers making adjustments in their payroll systems, some of those in the hospitality industry are wondering how a state’s higher minimum wage rate impacts the tip credit.
Is $2.13 An Hour Enough? Higher State Minimum Wage Rates Impact Tip Credit.
Many employers are nervously awaiting the possibility of a new federal minimum wage under the FLSA, while others must deal with increases already passed at the state level.
Both Workers and Employers Should Know Tip-Pooling Laws.
Tip pooling is a way of life in certain establishments. Tip-oriented businesses from restaurants to golf courses can, under the law, require tipped employees to share that money with other employees.
DOL Opinion Letter Clarifies Permissible Deductions from Credit Card Tips.
The U.S. Department of Labor (DOL) recently issued an opinion letter stating that restaurant employers may deduct an average standard composite amount from tips included on customers' credit card payments to recover the charges imposed by the credit card companies for liquidating the tip amounts, rather than deducting the precise amount charged by each credit card company. However, the employer may not deduct an amount that exceeds the employer's actual expenses incurred in transferring to cash the tips charged on a credit card. Additionally, an employer cannot deduct its administrative costs associated with credit card transactions from an employee's tips.
No free rides on 'imposed gratuities' for chauffeurs (pdf).
The Fair Labor Standards Act (FLSA) requires you to pay employees the federal
minimum wage and overtime when they work more than 40 hours in a workweek. The FLSA
provides certain exemptions for employees who receive tips. In some circumstances, you may
pay tipped employees a base hourly wage of less than the federal minimum wage because the tips
they receive are counted as part of their wages. That “tip credit,” however, is allowed only if
certain requirements are fulfilled. The U.S. Department of Labor (DOL) recently issued an
opinion letter that addresses the question of whether an employer may apply an “imposed
gratuity” toward its tip credit and explains the tip credit and overtime calculation for tipped
employees in detail.
