Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, presented testimony focusing on the concept of the tip credit; the Department of Labor’s efforts to regulate the tip credit based on time and tasks; how those efforts have fared in court; and various recent proposals relating to the tip credit, including H.R. 1612, and the “Tipped Employee Protection Act” before the United States House of Representatives, Committee on Education and the Workforce, Subcommittee on Workforce Protections, in a hearing entitled “Examining the Biden-Harris Attacks on Tipped Workers.
Related reading:
- Law360, “House Panel Members Question Legitimacy of Axed Tip Rule,” by Max Kutner.
A U.S. House panel chair criticized Wednesday a tip credit rule that the Fifth Circuit recently vacated, calling it burdensome and out of touch.
During the hearing of the House Committee on Education and the Workforce's Subcommittee on Workforce Protections, Republicans and their witnesses described a U.S. Department of Labor rule regarding when employers could take a tip credit as bad for both businesses and workers. Lawmakers questioned wage and hour experts about whether employers should be able to take a tip credit at all. …
The discussion came after a Fifth Circuit panel on Aug. 23 struck down the 2021 rule, finding it went against the Fair Labor Standards Act. Among other things, the rule codified the 80-20 principle, under which a worker must spend no more than 20% of time on nontipped activities for an employer to claim a tip credit.
The FLSA allows employers to take a tip credit and pay workers below the federal minimum wage, with the expectation that tips make up the difference. The federal minimum wage is $7.25 an hour, and the tipped minimum wage is $2.13 an hour. …
Paul DeCamp of Epstein Becker Green, who served as DOL Wage and Hour Division administrator under former President George W. Bush, said tipped workers are "doing very well" and "the idea that most tipped employees are on the edge of starvation is just wrong."
DeCamp represented the challengers to the tip rule in the Fifth Circuit case.
- Committee on Education and the Workforce, E&W Blog, “Hearing Recap: Tipped Workers Edition.”
Today, the Workforce Protections Subcommittee held a hearing concerning the Biden-Harris administration’s harmful rule that restricted the tip credit.
The tip credit is a tool used in the service industry to manage labor costs effectively and maximize take-home pay for tipped workers. Under this system, employers can count a portion of an employee’s tips towards the employer’s obligation to meet the federal minimum wage. This allows employers to give competitive wages to untipped backroom employees like dishwashers, while tipped workers remain well-paid. In fact, the median wage for full-service restaurant wait staff employees is around $27 per hour.
Chairman Kevin Kiley (R-CA) opened the hearing by exposing the shockwave that the tip credit rule has sent through the service industry. He stated, “There are over four million Americans working in tipped occupations, and they’re telling us very clearly: don’t take away the tip credit. In a recent survey, 90 percent of tipped employees said they prefer the current system.”
The witness panel featured experts including Mr. Tom Boucher, CEO-Owner of Great NH Restaurants, Inc; Mr. Paul DeCamp, Member of Epstein, Becker & Green, P.C.; and Ms. Simone Barron, Co-Founder of the Full-Service Workers Alliance.
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