Total Articles: 95
FordHarrison LLP • October 10, 2019
Executive Summary: On Monday, October 7, 2019, the Department of Labor (DOL) proposed a new 80/20 rule and tip pooling regulation. First, the proposed regulation, if finalized, will permit employers to take a tip credit regardless of the amount of non-tip generating work (such as cleaning tables or folding napkins) a tipped employee performs as long as it is performed contemporaneously with his/her tipped duties, or within a reasonable time immediately before or after performing tipped duties. Second, the proposed regulation eliminates some regulatory restrictions regarding tip pooling when the employer does not take a tip credit. If the proposed rule is finalized, employers who do not take a tip credit will be permitted to include “back-of-the-house” employees who usually do not receive tips (such as cooks and dishwashers) as part of a tip pool. Lastly, the existing rule prohibiting employers from keeping employees’ tips or participating in tip-pooling arrangements will remain.
Littler Mendelson, P.C. • October 09, 2019
Over a year after Congress amended the Fair Labor Standards Act (FLSA) to clarify tip ownership questions, the U.S. Department of Labor (DOL) finally published a Notice of Proposed Rulemaking on October 8, 2019, with proposed changes to its current regulations on handling tips under its minimum wage guidance. The proposed regulatory changes address two key areas. First, the DOL proposes to finalize a rule previously outlined in its 2018 Field Assistance Bulletin that clarified who can, and who cannot, receive tips when a tipped worker does not receive a tip credit. Second, the proposed regulations adopt the DOL’s 2018 opinion letter that outlined the proper scope of the dual jobs regulation and the so-called 80/20 Rule involving work done by employees receiving a tip credit.
Jackson Lewis P.C. • October 09, 2019
The Department of Labor (DOL) published a Notice of Proposed Rulemaking (NPRM) on October 8, 2019, to eliminate the “20% Rule,” or “80/20 Rule,” under the Fair Labor Standards Act (FLSA).
XpertHR • October 09, 2019
The US Department of Labor (DOL) today announced it is proposing changes to its Fair Labor Standards Act (FLSA) minimum wage tip credit regulations.
Fisher Phillips • October 09, 2019
Employers that utilize the “tip credit” in the federal Fair Labor Standards Act (“FLSA”), or whose employees receive tips, should carefully consider regulatory changes that were proposed by USDOL today. While many of the proposed regulatory changes were expected, some were not, and even the expected changes will require employers to recalibrate some of their policies assuming that USDOL ultimately adopts the proposals into final law. Employers wishing to comment on these proposals have until December 7, 2019 to submit their comments.
Ogletree Deakins • October 08, 2019
On April 6, 2018, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin No. 2018-3 in an effort to clarify the tip pooling amendments in the Fair Labor Standards Act (FLSA). The DOL bulletin provides that employers that pay the full minimum wage under the FLSA (currently $7.25 per hour) are no longer prohibited from allowing employees who are not customarily and regularly tipped employees—such as cooks and dishwashers—to participate in tip pools.
Jackson Lewis P.C. • February 21, 2019
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 not (e.g., refilling condiment bottles while waiting for customers to arrive), and to invalidate the tip credit for the period during which a server performed such non-tip-generating duties.
Fisher Phillips • February 18, 2019
On February 15, the U.S. Department of Labor struck another nail into the coffin of the infamous “20% Rule,” the agency’s prior enforcement position which purported to limit an employer’s ability to take the federal Fair Labor Standards Act tip credit. Under this rule, USDOL would not permit an employer to take the tip credit if the tipped employee spent more than 20% of his or her work time performing “related duties,” meaning duties that are not directly customer-facing or tip-producing, but that are related to the tipped occupation (i.e. a server making coffee or cleaning tables).
Jackson Lewis P.C. • November 25, 2018
The Wage and Hour Division (WHD) of the Department of Labor (DOL) has reissued a 2009 opinion letter, effectively withdrawing enforcement guidance that made the tip credit under the Fair Labor Standards Act (FLSA) unavailable for tipped employees who spend more than 20% of their time performing allegedly non-tip-generating duties.
Littler Mendelson, P.C. • November 13, 2018
On November 8, 2018, the U.S. Department of Labor (DOL) reissued and adopted a nearly decade-old opinion letter to clarify how employers must pay tipped employees who perform dual jobs.
Ogletree Deakins • November 13, 2018
On November 8, 2018, the Department of Labor (DOL) gave hospitality employers good news when it retracted its "80/20 rule," which prevented employers from taking the tip credit when tipped employees spent more than 20 percent of their working time on non-tipped work.
Fisher Phillips • November 09, 2018
The United States Department of Labor (USDOL) issued four opinion letters today in which it construed issues arising under the federal Fair Labor Standards Act (“FLSA”). The most significant of these letters, FLSA2018-27, is one that addresses the Section 3(m) tip credit which employers may take for certain types of employees under certain circumstances. FLSA2018-27 is an important development that appears to signal the impending demise of the much-maligned, and legally-suspect, “20% Rule” that has caused problems for many employers of tipped employees, particularly in the restaurant industry.
Jackson Lewis P.C. • November 09, 2018
The Department of Labor (“DOL”) today rescinded its prior guidance that made the tip credit unavailable to tipped employees who spend more than 20% of their time performing allegedly non-tip generating duties.
Brody and Associates, LLC • October 29, 2018
In late 2017, the United States Department of Labor proposed modifying the rules regarding tip pooling. Presently, tips belong to the employee earning them, regardless of whether the employee is paid minimum wage or the employer uses a tip credit to satisfy minimum wage. In the DOL’s proposal, employers who pay the full minimum wage are allowed to require employees to share tips with employees who do not receive direct tips such as dish washers and cooks.
FordHarrison LLP • October 02, 2018
Executive Summary: On September 18, 2018, a year after a three-judge panel of the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of Marsh v. J. Alexander’s LLC, 869 F.3d 1108, a larger en banc panel of the court has overturned the previous decision, perpetuating uncertainty regarding timekeeping and minimum wage requirements for hospitality employers. The previous decision by a three-judge panel on September 6, 2017 had split with the Eighth Circuit over the U.S. Department of Labor’s (DOL) current position on the FLSA’s “dual jobs” regulation and what is commonly called the “80/20 rule,” which states that hospitality employers may not reduce a tip-earning employee’s hourly pay below the minimum wage when that employee spends more than 20 percent of his or her workweek on non-tip-earning tasks.
Fisher Phillips • September 30, 2018
In a case that refuses to go away, the Ninth Circuit, now sitting en banc, has held that the plaintiff in Marsh v. J. Alexander's stated an FLSA minimum wage claim based on the USDOL's so-called "20% Rule" limiting a tipped employee's activities.
Littler Mendelson, P.C. • September 20, 2018
Many years ago, the U.S. Department of Labor (DOL) issued guidance known as the "20% Rule" or "80/20 Rule," which provides that, where tipped employees spend in excess of 20% of their workweek on non-tip-earning tasks, no tip credit may be taken for the time spent in such duties. The 20% Rule has been the subject of much litigation in courts across the country. In September 2017, a three-judge panel of the Ninth Circuit Court of Appeals rejected the DOL’s guidance, finding that it was not entitled to any deference.1 A year later, on September 18, 2018, the full Ninth Circuit reversed the earlier three-judge panel decision, and held that the DOL guidance was entitled to deference,2 meaning that the 20% Rule is alive and well (at least in the Ninth Circuit).
Fisher Phillips • August 05, 2018
Section 3(m) of the federal Fair Labor Standards Act ("FLSA") permits an employer to take the "tip credit" for "tipped employees". Certain requirements must be met though, including that the employee must earn a sufficient amount in tips such that when the direct cash wage (at least $2.13 per hour) and tips are combined, the employee has made at least $7.25 per hour.
The restaurant industry is hoping to overturn a federal policy that prohibits employers from claiming a minimum wage tip credit for employees who spend more than 20% of their time performing duties that do not directly produce tips, such as washing dishes or making coffee.
Jackson Lewis P.C. • July 15, 2018
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 Law Center v. U.S. Dept. of Labor, No. 18-cv-567 (W.D. Tex. July 6, 2018). The 80/20 Rule seeks to limit the availability of the tip credit when tipped employees spend more than 20% of their time performing allegedly non-tip generating duties. One of several problems in applying such a rule is identifying what is, and what is not, an allegedly “tip-generating” duty.
Ogletree Deakins • July 11, 2018
It is quite common in the hospitality industry for employers to pay tipped employees a cash wage that is less than the required minimum wage. This practice is permissible under the Fair Labor Standards Act’s (FLSA) tip credit provisions. The philosophy underlying the tip credit is that the tipped employees are receiving compensation in the form of tips from customers, thereby relieving the employer of some of the burden associated with paying the full minimum wage.
Ogletree Deakins • May 07, 2018
Restaurant owners have been anxiously awaiting the Department of Labor’s (DOL) guidance regarding proper participation and operation of tip pools after the passage of the March 23, 2018, Consolidated Appropriations Act, which contained a little notice amendment to the Fair Labor Standards Act (FLSA). Tip pooling regulations have undergone a series of reversals recently as the DOL has worked to find a one-size-fits-all regulation to apply to varying restaurant concepts. In 2010, the Ninth Circuit, in Cumbie v. Woody Woo, Inc., provided a victory for employers that did not take a tip credit by allowing those restaurants to permit tipped and non-tipped employees to share in tips from customers. In response, in 2011, the DOL issued regulations disagreeing with the court’s decision and explicitly prohibiting employers from distributing tips through mandatory tip pools to employees who do not “customarily and regularly receive tips” from guests (effectively excluding traditional back of house employees and, in most cases, hostesses).
Nexsen Pruet • May 02, 2018
In the past year, the U.S. Department of Labor (DOL) has made several announcements concerning the evolution of the tip pooling rules. These have focused on employees who had been banned from inclusion in a tip pooling arrangement due to the nature of their work, even if they earned the federal minimum wage and their employer did not claim a tip credit on their wages. (For a full discussion of the prior announcements, please see our December 13, 2017 and September 20, 2017 articles.)
Ogletree Deakins • April 25, 2018
Sometimes departing employees are more comfortable expressing their concerns in writing rather than communicating them verbally. These written messages may take the form of what’s often called a “vent letter,” which could range from an informal email to something that looks more like a formal complaint. Employers and human resources (HR) professionals are tasked with appropriately addressing such communications. Here are some tips and answers to commonly asked questions about vent letters.
FordHarrison LLP • April 15, 2018
As reported last week, on March 23rd, President Trump signed into law a massive spending bill that, among other things, amended the Fair Labor Standards Act (FLSA) to clarify that a manager or supervisor may not keep his employees’ tips. The amendment, however, did not define the term “manager” or “supervisor.” Further, although the March 23rd amendment eliminated a 2011 Department of Labor (DOL) regulation that prohibited an employer from requiring a tip pool with employees other than those who “customarily and regularly receive tips” even if it paid the employee at least the minimum wage, the amendment did not state that the business practice was acceptable.
Littler Mendelson, P.C. • April 12, 2018
On March 27, 2018, President Donald Trump signed into law Congress’s $1.3 trillion, 2,232-page omnibus budget bill, the Consolidated Appropriations Act, 2018. Notably, on page 2,025, Congress amended the Fair Labor Standards Act by addressing rules affecting tipped employees and tip ownership, and putting to rest a notice of proposed rulemaking on the same subject. The FLSA amendment left open many questions, some of which were answered on April 6, 2018, when the Department of Labor issued Field Assistance Bulletin No. 2018-3.
After Congress amended the Fair Labor Standards Act (FLSA) last month to prohibit managers and supervisors from keeping employees' tips, many employers were left to wonder: who exactly is a manager or a supervisor?
Fisher Phillips • April 03, 2018
As we previously wrote, Congress has now amended Section 3(m) of the federal Fair Labor Standards Act (FLSA) to prohibit an employer from "keep[ing] tips received by its employees for any purpose, including allowing managers or supervisors to keep any portion of employees' tips, regardless of whether or not the employer takes a tip credit." So why did Congress include this amendment within a budget reconciliation bill, with little fanfare and apparently no public debate? With that question in mind, we look back at the series of events that culminated in the recent amendment. We also highlight questions resulting from the amendment that will likely require future agency guidance and/or regulatory action.
An amendment to the Fair Labor Standards Act (FLSA) in the Consolidated Appropriations Act of 2018, the omnibus budget bill signed into law by President Trump and effective on March 23, prohibits employers, including managers or supervisors, from keeping any part of tips received by employees for any purpose, regardless of whether the employer takes a tip credit.
FordHarrison LLP • April 02, 2018
On March 23rd, President Trump signed into law a massive spending bill. Buried on page 2025 of the spending bill, available here, is the following amendment to Section 203(m) of the Fair Labor Standards Act (FLSA), the federal wage-hour law: “An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” The new law also states that any employers who violate this rule will be liable to the employees in the amount of the tips that were taken, “an additional equal amount as liquidated damages,” and “a civil penalty not to exceed $1,100 for each such violation,” as the U.S. Department of Labor (DOL) shall determine. The back story to this change in the wage-hour law is important to understanding its impact on wage-hour enforcement going forward.
Jackson Lewis P.C. • March 28, 2018
An amendment to the Fair Labor Standards Act (FLSA) in the omnibus budget bill, “Consolidated Appropriations Act, 2018,” passed by Congress and signed by President Donald Trump on March 23, 2018, provides that an employer “may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”
Fisher Phillips • March 25, 2018
In the budget reconciliation bill passed early this morning, Congress included a rider amending the federal Fair Labor Standards Act (FLSA) Section 3(m) to state,
FordHarrison LLP • March 18, 2018
Executive Summary: On February 16, 2018, the United States Court of Appeals for the Ninth Circuit granted en banc review of Marsh v. J. Alexander’s LLC, 869 F.3d 1108, creating a new layer of uncertainty for hospitality employers. The previous decision by a three-judge panel on September 6, 2017, had rejected what is commonly called the “80/20 rule,” which states that hospitality employers may not reduce a tip-earning employee’s hourly pay below the minimum wage when that employee spends more than 20 percent of his or her workweek on non-tip-earning tasks. The case will now be reconsidered by a larger panel of the Ninth Circuit, with oral argument scheduled for the week of March 19, 2018. The grant of en banc review suggests an intention to reconsider the panel’s prior holding or analysis.
FordHarrison LLP • February 11, 2018
Federal regulations currently treat tips as the employee’s property, regardless of whether the employer pays that employee the minimum wage or whether it uses a tip credit to satisfy the minimum wage requirement. Recently, the federal Department of Labor (DOL) proposed a rule that, if passed this year, would allow employers to require the sharing of tips with employees who do not customarily receive direct tips (such as restaurant cooks, dish washers, and similar workers), so long as the employer pays employees the full federal minimum wage of $7.25 per hour. Employers who use the tip credit option to satisfy the minimum wage obligation would not be allowed to require tip sharing with workers who do not customarily receive tips.
Nexsen Pruet • December 15, 2017
The U.S. Department of Labor (DOL) published a notice of proposed rulemaking (NPRM) in the December 5, 2017 edition of the Federal Register, with a proposal to rescind its 2011 regulations on tip pooling. The NPRM appears to be, at least in part, a response to efforts by the hospitality industry – particularly the restaurant industry – to press for change to the strict rules on tip sharing.
Ogletree Deakins • December 11, 2017
In response to significant pressure from the hospitality industry—specifically, the restaurant industry—as well as increasing litigation and changes to reduce or eliminate the use of tip credits at the state level, the U.S. Department of Labor (DOL) published a notice of proposed rulemaking (NPRM) in the December 5, 2017, edition of the Federal Register, in which it proposes to rescind its 2011 regulations concerning tip pooling.
FordHarrison LLP • December 07, 2017
Executive Summary: On December 5, 2017, the U.S. Department of Labor (DOL) published its Notice of Proposed Rulemaking (NPRM) to reverse the Obama Administration’s tip rule prohibiting the distribution of tips to anyone other than the tipped-employees who earned them (available here). The Obama-era rule has been lauded by employee-advocates as a needed protection from employer abuse, while criticized by employers for stifling their ability to share tips with other non-tipped employees. It has also created legal uncertainty throughout the country, and caused a split among federal courts. Although the DOL’s newly proposed rule will provide increased short-term certainty for employers, legal challenges on this issue are likely to continue.
Littler Mendelson, P.C. • December 06, 2017
The U.S. Department of Labor (DOL) has issued a proposed rule to rescind the Department’s position that employers must comply with tip-pooling requirements even when paying the full minimum wage. This proposal, if finalized, would allow employers that pay employees at least the full federal minimum wage to require employees to share tips with employees who are not otherwise customarily tipped, such as cooks, dishwashers, porters and maintenance staff. This rule would not affect employers that apply a tip credit towards employees’ wages.
Fisher Phillips • December 06, 2017
We have previously written about the U.S. Department of Labor's position adopted in 2011 saying that an employer may not retain any of an employee's tips even if management:
Fisher Phillips • October 27, 2017
The U.S. Department of Labor has taken the next step toward rescinding the prior administration's 2011 regulatory position that an employer may not retain any of an employee's tips even if management:
Jackson Lewis P.C. • October 27, 2017
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). The provisions of Section 203(m) of the FLSA require, among other things, that tipped employees paid a tip credit rate retain all of their tips except for permissible tip pools.
Nexsen Pruet • September 20, 2017
When a customer leaves a tip for a server, who receives the full amount of the tip at the end of the day? According to a 2011 Department of Labor (DOL) regulation, the tip always belongs to the server, even if the employer pays the server minimum wage. However, a recent DOL announcement in late July has put this issue back on the table and may resolve a conflict between courts across the country as to tip practices within the hospitality industry. The 2011 regulation states that tips are the property of the employee regardless of whether the employer pays the employee minimum wage and claims a tip credit. Now, DOL is rescinding this regulation, which will allow employers more flexibility in their tip pooling practices.
Littler Mendelson, P.C. • September 13, 2017
On September 6, 2017, the Ninth Circuit Court of Appeals declined to accord deference to the U.S. Department of Labor's (DOL) interpretation of its "dual jobs" regulation. The court reasoned that the interpretation, as articulated in the DOL's Field Operations Handbook (FOH), was inconsistent with the dual jobs regulation and attempted to create a de facto new regulation. The appellate court rejected the FOH's requirement that employers evaluate employee work on a duty-by-duty and minute-by-minute basis to determine whether an employer may take a tip credit for specific time worked. The court favored the DOL's earlier guidance on the regulation, which instructed employers to look for a "clear dividing line" to distinguish between when an employee is engaged in a customarily tipped occupation versus a second and separate non-tipped occupation.
Jackson Lewis P.C. • September 11, 2017
Finding it wholly inconsistent with the statute and the regulation it purports to interpret, the Ninth Circuit has held invalid the United States Department of Labor’s “80/20” tip credit rule, or “20% Rule,” which limits the availability of the tip credit when tipped employees spend more than 20% of their time performing allegedly non-tip generating duties.
FordHarrison LLP • September 08, 2017
Executive Summary: On September 6, in Marsh v. J. Alexander’s LLC, the Ninth Circuit Court of Appeals refused to give deference to the U.S. Department of Labor’s (“DOL”) tip-credit guidance under the Fair Labor Standards Act (“FLSA”). The guidance—commonly known as the “80/20 rule”—provides that employers may not take a “tip credit” for time spent performing duties “related” to tip-producing activities (e.g., cleaning tables or rolling silverware) if these duties constitute more than 20 percent of the tipped employee’s time in a given week. In holding that the 80/20 rule is inconsistent with the FLSA because it improperly analyzes an employee’s duties rather than the performance of distinct jobs, the Ninth Circuit created a circuit split on this issue, and potentially paved the way for a U.S. Supreme Court decision with national impact.
Phelps Dunbar LLP • September 08, 2017
In a decision rendered on September 6, 2017, the 9th U.S. Circuit Court of Appeals found that the Department of Labor’s (“DOL”) interpretative guidance on an employer’s obligation to pay tipped workers the federal minimum wage for non-tipped work under the Fair Labor Standards Act (“FLSA”) is not entitled to deference.
FordHarrison LLP • July 25, 2017
Quite a bit of effort goes into making an enjoyable restaurant experience, such as good food, prompt service and, of course, cleanliness. Want to reward the dishwashers for providing you with spotless silverware, expediters for bringing out your food while it is still hot or the chef for cooking the perfect meal by leaving a generous tip? Not so fast. Cooks, expediters and other back-of-the house employees historically have not been able to legally share in the tips that are pooled and distributed among the servers, hosts and others in the front of the house.
Fisher Phillips • July 25, 2017
The U.S. Department of Labor plans to propose, sometime in August, a full rescission of the controversial tip-pooling restrictions that impact employers who pay tipped employees the full minimum wage directly, according to a regulatory agenda published July 20. This news should come as a welcome relief to employers in the hospitality industry, especially those operating in the Ninth Circuit — which includes the states of California, Nevada, Washington, Arizona, Oregon, Idaho, Montana, Hawaii, and Alaska — where a divisive 2016 appellate court decision has operated the last several years to handcuff a substantial number of businesses.
Ogletree Deakins • July 25, 2017
In a welcome sea change for the hospitality industry, the U.S. Department of Labor (DOL) announced on July 20, 2017 that it would repeal the Obama administration’s 2011 regulations that severely curtailed tip pooling. The DOL further announced that, as it works to finalize the repeal, its investigators are barred from enforcing the Obama-era rule.
The US Department of Labor (DOL) has announced that it plans to rescind the current Fair Labor Standards Act (FLSA) restrictions on "tip pooling by employers that pay tipped employees the full minimum wage directly."
Fisher Phillips • July 21, 2017
The U.S. Department of Labor plans to propose a full rescission of the controversial tip-pooling restrictions impacting employers who pay tipped employees the full minimum wage directly sometime in August, according to a regulatory agenda published this morning.
Fisher Phillips • July 21, 2017
We recently wrote about two federal appellate decisions holding that tipped employees for whom no federal Fair Labor Standards Act Section 3(m) "tip credit" has been taken, and to whom all FLSA minimum wages and overtime compensation due have been paid, may not sue under that law to recover tips that their employers allegedly unlawfully retained.
Jackson Lewis P.C. • July 21, 2017
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.
FordHarrison LLP • July 05, 2017
Executive Summary: On June 30, 2017, the U.S. Court of Appeals for the Tenth Circuit ruled in Marlow v. The New Food Guy, Inc. d/b/a Relish Catering (Relish) that neither the Fair Labor Standards Act (FLSA) nor a Department of Labor (DOL) regulation requires an employer to share customers’ tips with employees so long as the employees are paid more than minimum wage.
Fisher Phillips • June 14, 2017
In a welcome decision for employers, the Eleventh Circuit U.S. Court of Appeals (having jurisdiction over Alabama, Florida, and Georgia) recently ruled that a tipped employee for whom no federal Fair Labor Standards Act "tip credit" had been taken, and to whom all FLSA wages due had been paid, could not sue her employer under that law for allegedly converting some of her tips to the employer's own uses.
Fisher Phillips • February 20, 2017
We've all struggled with what to do when we're given conflicting orders. Grandma says "have some pudding," and Pink Floyd's Roger Waters responds, "how can you have any pudding if you don't eat your meat?!" Employers are increasingly facing similar (though perhaps less-existential) wage-related conflicts.
Fisher Phillips • September 12, 2016
The U.S. Court of Appeals for the Ninth Circuit has denied petitions for rehearing, as a panel or en banc, its opinion earlier this year holding that the U.S. Department of Labor could extend the Fair Labor Standards Act’s tip-pooling restrictions to instances where the tipped employees received the minimum wage without reliance on the Section 203(m) tip credit. Circuit Judge Diarmuid O’Scannlian’s highly critical dissent, in which he was joined by nine others, could serve as a tempting invitation for the U.S. Supreme Court to accept review of the matter.
Fisher Phillips • September 07, 2016
Restaurants and other hospitality businesses in the Western U.S. received bad news late yesterday as a federal appeals court refused to strike down a controversial tip-pooling regulation. The U.S. Department of Labor’s (USDOL’s) rule prohibits businesses from requiring employees to share their tips even if the tipped employees are paid minimum wage, and although a group of hospitality employers hoped that a court would reject the rule as running contrary to well-established law, the 9th Circuit Court of Appeals once again upheld the rule.
Phelps Dunbar LLP • August 23, 2016
A federal district court in the Southern District of Florida joined a growing number of district courts in holding that the Department of Labor’s interpretation of the “tip credit” provision of the Fair Labor Standards Act, 29 U.S.C. § 203(m), is invalid. See Aguila v. Corporate Caterers II, Inc., No. 1:15-cv-24350-KMM, 2016 WL 4196656, *1 (S.D. Fla. Aug. 9, 2016).
Jackson Lewis P.C. • August 16, 2016
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.
Jackson Lewis P.C. • July 31, 2016
The Fair Labor Standards Act has long provided that an employer may satisfy its federal minimum wage obligations for a tipped employee by applying the employee’s tips as a credit toward the minimum wage and, in doing so, directly pay such employee less than the general minimum wage. If the employer’s wages plus the employee’s tips do not equal or exceed the minimum wage, the employer must make up the difference. Moreover, in order to take advantage of the tip credit, the employer is required to notify its tipped employees that it is taking the tip credit and to provide certain information pertaining to the credit.
Jackson Lewis P.C. • July 28, 2016
On July 26, 2016, Judge William S. Duffey of the United States District Court for the Northern District of Georgia issued a decision holding that an employer does not have to ensure tipped employees retain all of their tips 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). In Malivuk v. AmeriPark, LLC, the plaintiff sued defendant AmeriPark, LLC (a provider of valet parking services) under the FLSA claiming that Ameripark illegally withheld tips paid to her and other valets. Malivuk v. AmeriPark, LLC, 2016 U.S. Dist. LEXIS 97093 (N.D. Ga. July 26, 2016).
Restaurants and other employers that require wait staff, bartenders and other tipped employees to clean tables, make coffee or perform other similar duties can draw comfort from a new appeals court ruling.
Littler Mendelson, P.C. • July 04, 2016
The U.S. Court of Appeals for the Fifth Circuit concluded on June 14, 2016 that an employer may not deduct more than the actual credit card fees associated with liquidated credit card tips for employees without compromising the tip credit taken by the employer against the employee’s wages. Steele v. Leasing Enterprises, Ltd., No. 15, 20139 is an important decision for employers with operations in the Fifth Circuit because it endorses for the first time other courts’ conclusions that certain deductions may be made against an employee’s tips by an employer without disturbing the tip credit, but illustrates the danger in overreaching in those deductions.
Fisher Phillips • July 04, 2016
A recent U.S. Labor Department blog post re-casts the agency's long-running campaign against an alleged "subminimum wage for tipped workers" under the federal Fair Labor Standards Act. Although this latest pitch introduces a different phrase, USDOL also recycles last year's canard that "[t]he current federal tipped minimum wage . . . still stands at just $2.13 per hour."
Ogletree Deakins • March 04, 2016
In a split 2-1 decision, the Ninth Circuit Court of Appeals ruled in Oregon Restaurant and Lodging Association v. Perez (February 2016) that its 2010 decision in Cumbie v. Woody Woo, Inc. did not prevent the U. S. Department of Labor (DOL) from implementing regulations prohibiting all employers—even those that do not take advantage of a “tip credit”—from requiring tipped employees to participate in a tip pool that includes employees who are not “customarily and regularly” tipped.
FordHarrison LLP • March 03, 2016
Section 203(m) of the Fair Labor Standards Act (FLSA) allows employers of tipped employees to take a tip credit against the employer's minimum wage obligation if: (a) notice of the tip credit is provided, and (b) tipped employees are allowed to retain all of their tips, except in the case of tipped employees participating in a valid tip pool that only includes other tipped employees. The DOL's 2011 Regulations provided that employers who do not take a tip credit pursuant to § 3(m) must pay their employees the full cash minimum wage, may not retain employees' tips, and may not require employees to participate in a tip pool that includes non-tipped employees. The 2011 Regulations were a direct response to, and rejection of, the Ninth Circuit Court of Appeals' decision in Cumbie v. Woody Woo, 596 F.3d 577 (9th Cir. 2010), which held that § 3(m) does not preclude employers who do not take a tip credit from maintaining a tip pool that includes non-tipped employees (e.g. cooks, dishwashers and other back-of-the-house employees).
Fisher Phillips • March 02, 2016
In a surprising decision that may require many restaurants and other hospitality businesses in the Western U.S. to alter their labor practices, the 9th Circuit Court of Appeals upheld a 2011 U.S. Department of Labor (USDOL) rule that prohibits businesses from requiring employees to share their tips even if the tipped employees are paid minimum wage. The February 23, 2016 decision applies to all businesses operating in the 9th Circuit, which includes the states of California, Nevada, Washington, Arizona, Oregon, Idaho, Montana, Hawaii, and Alaska (Oregon Rest. & Lodging Association v. Perez).
FordHarrison LLP • December 10, 2015
In this country, there are thousands of employees who earn their living off tips or gratuities they receive from customers. Over the last several years, there has been a movement afoot, particularly in the restaurant industry, to eliminate tipping from the workplace. Most recently, Joe's Crab Shack became the first major restaurant chain to test a "no-tipping" policy at more than a dozen of its locations. Servers, hosts, and bartenders at test locations of Joe's Crab Shack are now being paid a higher, fixed, hourly wage well above the current federal minimum wage of $7.25 per hour. Joe's Crab Shack is not the only restaurant experimenting with no-tipping policies. Union Square Hospitality Group announced earlier this year that 13 of its New York City restaurants will go to a no-tipping policy. "No-tipping" restaurants are still far from the norm in the United States but it is definitely a trend to watch.
Ogletree Deakins • November 10, 2015
In Montano v. Montrose Restaurant Associates., Inc., 800 F.3d 186 (5th Cir. Aug. 28, 2015), the Fifth Circuit Court of Appeals reversed and remanded a decision of the Southern District of Texas in which the trial court had granted summary judgment in favor of a restaurant. The issue was whether it was permissible under the Fair Labor Standards Act (FLSA) for the restaurant to include a “coffeeman” (also known as a “barista”) in a mandatory tip pooling arrangement with lead waiters, front waiters, back waiters, busboys, and bartenders.
Jackson Lewis P.C. • October 15, 2015
As New York’s hospitality industry prepares for a reduced tip credit and a fast food minimum wage, one New York restaurateur has announced its intention to eliminate tipping and thus, by extension, use of the tip credit: New York City’s Danny Meyer. This lengthy Eater feature discusses Meyer’s audacious new Hospitality Included program, noting the pitfalls encountered by other fine dining establishments which have moved away from American dining’s deep-rooted tipping conventions. Watch this space for further developments regarding NYS Department of Labor regulation of the hospitality industry and industry responses thereto.
Littler Mendelson, P.C. • September 04, 2015
In Montano v. Montrose Restaurant Associates, Inc., the U.S. Court of Appeals for the Fifth Circuit was presented with what may seem like an easy issue: does including a “coffeeman” in a tip pool invalidate the tip credit? The Fifth Circuit’s answer? It depends. While the court attempted to articulate a test that would provide some clarity, it may be such a fact-intensive inquiry that it does not provide employers much guidance.
XpertHR • September 04, 2015
A new appeals court ruling offers guidance for employers in Louisiana, Mississippi and Texas about how to determine which employees are eligible for the minimum wage tip credit.
Jackson Lewis P.C. • August 04, 2015
In accordance with the Ninth Circuit and several other federal court rulings, the Court of Appeals for the Fourth Circuit yesterday held that an employee cannot bring a claim for wages based on allegedly misappropriated gratuities under the FLSA. Trejo v. Ryman Hospitality Props., 2015 U.S. App. LEXIS 13204 (4th Cir. July 29, 2015).
Fisher Phillips • June 03, 2015
A recent post appearing on the U.S. Labor Department’s blog begins, “The federal tipped minimum wage has been $2.13/hour since 1991. That’s right – it’s been the same for nearly a quarter century.”
Fisher Phillips • February 19, 2015
A recent post appearing on the U.S. Department of Labor’s blog begins, “The federal tipped minimum wage has been $2.13/hour since 1991. That’s right – it’s been the same for nearly a quarter century.”
Fisher Phillips • February 17, 2015
A recent post appearing on U.S. Labor Department's blog begins, "The federal tipped minimum wage has been $2.13/hour since 1991. That's right - it's been the same for nearly a quarter century."
Ogletree Deakins • November 04, 2014
Many employers in the hospitality industry employ individuals who receive customer tips or gratuities in the ordinary course of their work day. These tips may serve as an offset against an employer’s minimum wage obligations under the federal Fair Labor Standards Act (FLSA)—but only if certain criteria are met.
Fisher Phillips • May 06, 2014
We’ve covered tips and tip credits at length in the past here, here, here, and here, and I could probably blog all day, every day just to keep up with the volume of tip-related cases and actions that are filed nationwide, some high profile and others not. I want to highlight one of them here.
Fisher Phillips • April 08, 2014
A White House report promoting a substantial jump in the federal Fair Labor Standards Act's minimum wage perpetuates now-widely-disseminated propaganda about an alleged "tipped employee minimum wage" of $2.13 per hour.
Ogletree Deakins • February 11, 2014
Automatic gratuities for large parties are commonplace in many restaurants, bars, and hotels throughout the country. However, as of January 2014, the Internal Revenue Service (IRS) now classifies these automatic gratuities as “service charges.” As a result, the automatic tips will be treated as regular wages and subject to payroll tax withholding.
Ogletree Deakins • August 27, 2013
A federal judge in the Middle District of Tennessee recently held that bouncers (sometimes referred to as “security guards”) at Coyote Ugly Saloons were properly permitted to participate in tip pools with bartenders, barbacks, and waitresses. The holding in Stewart v. CUS Nashville, LLC turns on the Coyote Ugly bouncers’ unique job duties, which require them to have significant customer interactions that differ from the duties of most bouncers in restaurant and retail settings.
FordHarrison LLP • July 05, 2012
The Revenue Ruling discusses the assessment of employer FICA taxes on tips, including the application of section 3121(q) of the Internal Revenue Code (the "Code") and the application of the credit allowed under section 45B of the Code, but warns that it is first necessary to determine whether a payment is actually a "tip" for these purposes, noting that it makes no difference what the payment might be called. Even though described as a "tip," a payment that constitutes a "service charge" is wages, and is subject to withholding and reporting as such.
Fisher Phillips • December 06, 2011
The U.S. Supreme Court is being asked to decide what amounts to the future of tip credit for many businesses â€“ 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.
Fisher Phillips • November 01, 2011
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.
Ogletree Deakins • July 19, 2011
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.
Fisher Phillips • June 02, 2011
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.
Fisher Phillips • May 03, 2011
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.
Fisher Phillips • February 22, 2011
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").
Ogletree Deakins • November 03, 2009
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.
Fisher Phillips • June 05, 2008
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.
Fisher Phillips • March 12, 2008
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.
Fisher Phillips • April 23, 2007
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.
Fisher Phillips • March 30, 2007
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.
Fisher Phillips • March 13, 2007
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.