Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC, office, was quoted in Law360, in “11 States Support Bid In 5th Circ. to Nix DOL Tip Rule,” by Henrik Nilsson. (Read the full version – subscription required.)

Following is an excerpt:

Eleven state attorneys general urged the Fifth Circuit Thursday to flip a Texas federal court ruling that keeps the U.S. Department of Labor's rule regulating tipped and non-tipped work alive, saying the DOL attempts to sidestep Congress' definition of a tipped employee.

Led by Ohio Attorney General Dave Yost, the 11 states filed the amicus brief in support of two restaurant groups' appeal. The states told the Fifth Circuit that the DOL's tip rule, enacted under the Fair Labor Standards Act, is invalid, as Congress left no ambiguity on what constitutes a "tipped employee."

Additionally, "the department's rule upsets the balance between state and federal governments by removing states' power to regulate in an area of traditional state concern," the state attorneys general wrote. "That dynamic is further reason why the rule is invalid."

In addition to Ohio, attorneys general from Arkansas, Georgia, Indiana, Iowa, Kansas, Mississippi, Montana, South Carolina, Texas and Utah signed the brief.

The amicus brief is filed to support the appeal by Restaurant Law Center and Texas Restaurant Association. The groups seek to overturn a lower court's ruling granting the DOL summary judgment in their suit challenging the validity of the 2021 rule. …

The DOL argues the FLSA's language fails to specify whether a tipped employee performing a task that does not produce tips is "engaged in" the "occupation" that produces tips at that precise moment. The rule set out to fix that ambiguity, according to the brief.

In rejecting this argument, the restaurant groups said that in the DOL's view, "the workforce involves exactly two 'occupations': pursuing tips and everything else."

"That approach to the law bears no relationship to, and indeed makes a mockery of, the statute Congress enacted," the groups argued.

Siding with the restaurants, the states argued the FLSA defines "'tipped employee' as 'any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips,' and exempts such employees from standard minimum wage."

Within the context of the FLSA, "occupation" refers to a whole job, not just the tasks most essential to that job, the states said. Similarly, the act refers to individual job tasks as "activities," the states wrote, adding that the FSLA does not define a "tipped employee" as someone engaged in an "activity," but rather as someone engaged in an "occupation."

"In these two ways, context demonstrates that Congress spoke directly to the issue of who is a 'tipped employee' by giving that term an unambiguous definition," the states argued. "This plain meaning of occupation means that the rule is invalid because Congress left no ambiguity for the department to fill in."

Additionally, given the text's unambiguity, the DOL fails to show any "statutory grounding" for transferring power from the states to the federal executive branch, the states argued.

The states added that the DOL is attempting to replace Congress' system with one of its own design.

"Agencies cannot replace Congress' expressed intent with their own preferred policy by claiming newfound ambiguity in a statute that has been functioning for decades," the states argued. "Instead, it takes a clear statement from Congress to authorize federal law that would redraw lines of state and federal sovereignty."

Paul DeCamp of Epstein Becker Green, counsel for the restaurant groups, told Law360 in an email that "the amicus brief of the eleven states underscores the important federalism interests at stake in this case and why the Department of Labor's interpretation of the FLSA violates longstanding principles of statutory construction."


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