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 “Restaurant Groups Urge 5th Circ. to Toss DOL's Tip Rule,” by Irene Spezzamonte. (Read the full version – subscription required.)

Followed is an excerpt:

The U.S. Department of Labor's rule regulating what's tipped and nontipped work "makes a mockery" of federal law, two restaurant groups told the Fifth Circuit, urging the appeals court to flip a Texas federal court ruling keeping it in place.

The Restaurant Law Center and Texas Restaurant Association told the appeals court that the lower court erred in granting the DOL summary judgment in their suit challenging the validity of the 2021 rule, saying the way the department created the rule isn't "a reasonable construction" of the Fair Labor Standards Act.

"In the department's view, the workforce involves exactly two 'occupations': pursuing tips and everything else," the groups said. "That approach to the law bears no relationship to, and indeed makes a mockery of, the statute Congress enacted."

The groups' case is back before the Fifth Circuit after a panel in May flipped a lower court's decision denying them a preliminary injunction on the rule, which allows employers to pay workers subminimum wage based on the expectation they will make up the earnings in tips. …

"For proof of the political significance of the final rule, one need look no further than the policy reversals that have occurred during each of the past four presidential administrations," the groups said. "An issue that has generated such controversy, leading to diametrically opposed rulemaking proceedings, is plainly a matter of political significance."

Overall, the FLSA is also pretty clear on how employers can apply the tip credit rules to their businesses, the groups said.

The groups said, citing the EPA ruling, that the DOL is trying to "hide 'elephants in mouse holes' … a nonexistent ambiguity to create a completely new test for when an employer can exercise its statutory right to take a tip credit that conflicts with the plain text of the FLSA."

Paul DeCamp of Epstein Becker Green, who is representing the groups, said the DOL's rule "ignores the text and history of the FLSA."

"In recent years, the federal courts have shown an increased willingness to rein in federal agencies that exceed their statutory authority by enacting illegal regulations," DeCamp said. "We look forward to presenting our arguments to the Fifth Circuit regarding why the department's rule is invalid."


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