Paul DeCamp Quoted in “5th Circ. Weighs Whether Costs Halt DOL Tip Rule”

A Fifth Circuit panel seemed conflicted Tuesday on whether the estimated costs triggered by a U.S. Department of Labor rule regulating tipped wages were enough to halt the rule, as the appeals court is mulling a Texas federal court's decision letting the rule stand.

The three-judge panel weighed during oral arguments whether a Texas federal judge correctly denied the Restaurant Law Center and the Texas Restaurant Association's bid for a preliminary injunction on the rule, which went into effect at the end of December 2021. The rule requires that tipped workers earn minimum wage when 20% of their time is spent on nontipped work.

The Fair Labor Standards Act allows employers to pay tipped workers as low as $2.13 per hour, as long as tips make up the difference between that amount and the federal minimum wage of $7.25 per hour.

Under the new rule, employers can have tipped employees perform nontipped work for up to 20% of their shifts and earn the smaller tipped minimum wage.

In its rule, the DOL also said that workers can perform tip-producing and tip-supporting work, such as cleaning a table after customers leave, as long as the latter task is related to serving clients.

Paul DeCamp of Epstein Becker Green, who is representing the groups, told the panel the rule can cost employers over $177 million — an estimate the DOL itself provided in its final rule. …

Overall, the rule changes very little in the tipped work landscape and defines more clearly when a worker has stopped being engaged in tip-producing work, Utrecht reiterated.

DeCamp disagreed with that view on rebuttal, saying that rule not only introduced the 30-minute threshold, but it also introduced the idle time concept, which the DOL told Law360 would fall under the tip-supporting framework.