Kathleen A. Barrett, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Chicago office, was quoted in Law360 Employment Authority, in “3 Tips for Navigating Tip Credit Rule's Demise,” by Daniela Porat. (Read the full version – subscription required.)
Following is an excerpt:
With the Fifth Circuit striking down a federal rule on tipped wages, restaurants may be ready to rejoice, but attorneys say employers still need to check whether their state and local laws impose strict obligations and should retrain staff on servers' duties.
The appeals court struck down the U.S. Department of Labor's 2021 tip credit rule on Aug. 23, scrapping a regulation that many in the hospitality industry had criticized as overly complicated in the way it limited the circumstances in which a restaurant could pay tipped employees the subminimum wage of $2.13 per hour.
Under the Fair Labor Standards Act, tipped workers can be paid that rate as long as tips carry them to the standard federal hourly minimum wage of $7.25. The 2021 rule required employers to pay full minimum wage to tipped workers who spend more than 20% of the workweek on tasks not directly engaged in tip-producing work — under what's known as the 80-20 principle. Employers also had to pay full minimum wage to tipped workers once they spent more than 30 consecutive minutes on tip-supporting, as opposed to tip-producing, work. The 2021 rule thus became known as the 80-20-30 rule.
Although employers may feel excited about the Fifth Circuit's decision, they should avoid immediately reverting to old practices without careful consideration, said Kathleen Barrett, a member of Epstein Becker Green who was part of the team that represented restaurant groups in their successful bid to vacate the rule.
"It's crucial to address the potential employee relations and wage and hour concerns before making adjustments," she said. "Take a deep breath and avoid making these premature changes."
Here, Law30 looks at three recommendations from industry attorneys as restaurants face new terrain when it comes to workers and tips. …
Keep Server Role Distinct
In place of the 80-20-30 rule, employers will look to what's known as the dual-jobs framework, first introduced in 1967, to guide their compliance efforts. …
Now, employers can focus on the role of the server as a whole, which is centered on customer service, Barrett said.
"The core function of that job of a server … is making sure that their customers are having a great experience, they're happy, so that they come back to the restaurant and leave a tip for the server," she said.
