DOL Releases Final Rule For Tipped Workers—Officially Withdraws 2020 Regulation
On October 28th, 2021, the United States Department of Labor (DOL) announced its final rule regarding the amount of time that tipped workers can spend in non-tipped activities. By doing so, the DOL officially withdrew a tipped worker final rule that was issued in the waning days of the Trump Administration. The new regulations are set to take effect on December 28th, 2021. In this article, you will find an overview of the DOL’s latest rule for tipped workers.
Four Things to Know About the DOL’s Tipped Worker Regulations
- Tip Credit: Employee Must Perform Tipped Work or “Directly Supportive” Work
Federal law allows employers to pay certain workers a sub-minimum (direct) wage as long as the employee makes up the difference in tips. To qualify for a “tipped worker credit”, an employee must be engaged only in tipped work and work that directly supports their tipped work. When a tipped employee engages in non-supportive, non-tipped work, they must be paid at least a minimum wage directly by their employer.
- 80/20 Standard for Tipped Work vs. Supportive Work
The Biden Department of Labor has already re-emphasized the 80/20 standard for tipped workers. To lawfully take the full tipped worker credit, an employer must ensure that a worker is engaged in actual tipped work for at least 80 percent of the time that they spend on the job. They can spend up to 20 percent of their time engaged in work that is technically not tipped, but is directly supportive of their tipped worker. An employee who spends more than 20 percent of their time as a non-tipped worker must be paid at least a direct minimum wage for their employer for some of that time.
- A Clear Bar on Manager Participation in Worker “Tip Pools”
The new rule from the DOL also clarifies that managers/supervisors are strictly forbidden from taking tips for a “pool” for non-management employees. Under the federal Fair Labor Standards Act (FLSA), managers can contribute to a tipped pool and they can take individual customer tips meant solely for themselves, but they cannot participate (withdraw) money from a collective tipping pool.
- A Full Restoration of Penalties for Employers the Violate Tipped Worker Requirements
Finally, the revised wage and hour regulation from the U.S. DOL has restored the previous regime of penalties for employers that violate tipped worker requirements. A Trump-era regulation restricted civil financial penalties to willful or repeated violations. Under the new rules set to take effect at the end of December 2021, an employer that violates tip wage requirements may face a fine of up to $1,100 per violation.
Get Help From a Wage and Hour Attorney in Florida
Sadly, tipped workers are too often denied the full and fair wages that they rightfully earned. Employers must be held accountable for violations. If you have any questions about wage and hour violations for tipped workers, contact an experienced Florida employment law attorney for help.