Since 1967, the Department of Labor’s Dual Jobs regulation has stated that an employee may be employed both in a tipped and in a non-tipped occupation simultaneously. Moreover, in this “dual jobs” situation, the employee is a “tipped employee” only while employed in the tipped occupation. An employer may only take a Tip Credit against its minimum wage obligations for the time the employee spends in that tipped occupation.
At the same time, the Department’s regulation also stated that an employee employed in a tipped occupation may perform related duties that are not “themselves . . . directed toward producing tips.” Therefore, distinguishing between employees who have dual jobs and tipped employees who perform “related duties” that do not “themselves” produce tips.
The 80/20 guidance stated that if a tipped employee performs too many “related duties”, the employee is no longer engaged in a tipped occupation. Essentially stating that if an employee spends more than 20% of the workweek on non-tipped related duties, that employee is no longer engaged in a tip producing job function and must be paid the full minimum wage.
Why is the DOL changing the Dual Jobs regulation?
A change was needed to clarify the difference between an employee that truly has two jobs within the restaurant, one tipped and one non-tipped, and a tipped employee that performs different job duties throughout their shifts.
Secondly, the Department of Labor determined that the 80/20 guidance “was difficult for employers to administer and led to confusion, in part because employers lacked guidance to determine whether a particular non-tipped duty is `related’ to the tip-producing occupation.
There were circuit courts that also found the guidance difficult to interpret and inconsistent with the FLSA’s goal of promoting fair working conditions.
What does the Department of Labor hope to accomplish with this new rule?
The goal of this final rule is to protect tipped employees, while also providing clarity and flexibility to employers, and courts, to address the variable situations that arise in tipped occupations.
Does this new final rule apply to every restaurant in the country?
No, this is a federal rule and would not be impactful in all states.
For example, the states of Washington and California do not allow employers to pay employees a tip-credit wage, and employers must pay tipped employees and non-tipped employees the same minimum wage.
What is the new rule for Dual Jobs?
- If an employee has two jobs, one tipped and one non-tipped, the non-tipped job cannot be paid a tip-credit wage
- The prior rule was not straightforward in regard to this situation
- In order for a tipped employee to be paid a tip-credit wage for their entire shift, that employee during their entire shift, is either performing work that produces tips or is performing work that directly supports the production of tips, provided that the directly supporting work is not performed for a substantial amount of time
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What is considered “tip producing work”?
Tip-producing work is “work that provides service to customers for which tipped employees receive tips.”
What is considered “directly supporting work”?
Directly supporting work is “work that is either performed in preparation of, or otherwise assists, the tipped employee’s tip producing work.”
- Example: Dining room prep work – such as refilling salt and pepper shakers and ketchup bottles, rolling silverware, folding napkins, sweeping or vacuuming under tables in the dining area, and setting and bussing tables
The directly supporting work cannot be performed for a substantial amount of time.
What is considered a substantial amount of time?
An employee has performed directly supporting work for a substantial amount of time if the tipped employee’s directly supporting work either (1) exceeds 20 percent of the hours worked during the employee’s workweek or (2) is performed for a continuous period of time exceeding 30 minutes.
What happens if an employee exceeds 30 minutes of non Tip Credit work?
In this situation, the employer would not be able take a tip-credit for the entire 45 minutes in which the employee was rolling silverware and would need to pay the employee the full federal minimum wage for rolling silverware.
What are examples of work that is not tip producing or directly supporting tipped work?
- Preparing food, including salads, and cleaning the kitchen or bathrooms, is not part of the tipped occupation of a server
- Cleaning the dining room or bathroom is not part of the tipped occupation of a bartender
When is this Final Tip Rule effective?
The final rule becomes effective December 28, 2021.
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