Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC, office, was quoted in the Bloomberg Law Daily Labor Report, in “Punching In: DOL’s Summer of Enforcement Efforts on Tipped Wages,” by Rebecca Rainey and Tre'Vaughn Howard.
Following is an excerpt:
Citing Companies for Shorted Tips | Big Business Fights Walkaround Rule
Rebecca Rainey: The US Labor Department has had a busy summer cracking down on tip theft. Since June, the agency’s wage arm has cited at least 13 companies for violations of its rules surrounding the tip-credit and tip pools.
Refresher: Under federal wage laws, employers can pay tip-earning workers as little as $2.13 an hour, so long as they earn $30 a month in tips. Employers are still responsible for ensuring these workers make at least the minimum wage at the end of the pay period, as well as overtime premium pay. There are also several limits on pooling tips—a common practice where tips are collected to distribute equally to other workers on the shift—such as only permitting those pools when all the workers participating are earning the tipped wage or when all workers contributing receive the full minimum wage.
Employers are also barred from keeping “any portion of employees’ tips for any purpose,” according to DOL’s fact sheet on tip regulations, and must keep various records including the weekly or monthly amount of tips received by an employee.
One of the largest cases involving these rules this summer includes a $1.3 million consent judgment obtained by the DOL …
Near the end of August, the division found the restaurant required “servers and bartenders to surrender a percentage of their tips, based on their total sales, to the restaurant at each shift’s end.” The employer also failed to keep records on how the tips were used, “making them unable to prove the restaurant’s tip pool was valid,” the agency said.
“Customer tips for good service are the property of the people who earned them, not their employers,” Wage and Hour Administrator Jessica Looman said in a statement on the judgment. “Misuse of all or any portion of tips by management violates workers’ rights.”
The DOL also recovered $912,000 in back wages, withheld tips, and liquidated damages from a New Hampshire taproom in July, after the agency found the restaurant illegally allowed managers and supervisors to participate in the tip pool, pocketed workers credit card tips, and failed to pay overtime. …
But despite DOL’s hot-tip-recovery summer, the Fifth Circuit recently limited the agency’s ability to intervene in situations where tipped employees are spending a large amount of time on side-work instead of tip earning duties.
On Aug. 23, the US Court of Appeals for the Fifth Circuit set aside a 2021 rule that required employers to pay tipped workers the full $7.25 federal minimum wage when they engaged in tip-supporting work, like rolling silverware or filling salt shakers, for more than 30 minutes straight or for more than 20% of their workweek.
Following the ruling, employers with tipped workers “can relax a little bit,” said Paul DeCamp, a management-side attorney with Epstein Becker Green who represented the restaurant groups that brought the lawsuit against the tip rule.
“For employees who are in a tipped occupation, as long as you meet the criteria in the statute in terms of receiving enough in tips and giving adequate notice, you can pay the employee at a tipped wage for all of the time that the employee works. That’s it. It was never meant to be complicated,” he said.
The DOL declined to comment on how the ruling will impact its enforcement efforts.
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