Articles Discussing Wage And Hour Issues In Particular Industries.

Last week, our firm hosted a webinar on recent developments in federal wage and hour law compliance as part of Nexsen Pruet’s Employment Law Certificate Series. The topic proved to be very timely as the U.S. Department of Labor (DOL) has been busy over the past few weeks.

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.

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).

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.

On September 24, the U.S. Department of Labor (DOL) announced a final ruleto update and increase the salary level required for an employee to qualify under the federal Fair Labor Standards Act (FLSA) as an exempt executive, administrative or professional employee.

Under the Fair Labor Standards Act, workers are entitled to overtime pay of 1 ½ times their regular rate of pay for hours worked over 40 in a workweek, but there are exemptions for executive, administrative, and professional employees (among other exemptions). To qualify for one of these three exemptions, an employee must meet both a “duties” test and a “salary” test. Under current salary test regulations, which have been in place since 2004, most employees must generally be paid a salary of at least $455 per week. ($23,660 annually). In 2016, the Department of Labor (“DOL”) issued regulations raising that salary threshold to $921 per week ($47,892 annually). A federal district court held those regulations to be invalid.

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.

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.

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.

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.

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.

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).

The U.S. Supreme Court recently gave relief to automotive, tractor, and aircraft dealerships, clarifying that service advisors are – like salesmen, partsmen, and mechanics – exempt from payment of overtime under the Fair Labor Standards Act (FLSA).

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.

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.)