Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC office, was quoted in Law360 Employment Authority, in “Texas Judge to Consider Blocking Biden's Tipped Wage Rule,” by Jon Steingart. (Read the full version – subscription required.)

Following is an excerpt:

Lawyers for the U.S. Department of Labor will go to court Wednesday to defend a rule that aims to boost tipped workers' incomes from restaurant industry criticism that compliance will be so costly that it will decimate the hospitality sector.

The rule places limits on an employer's ability to pay less than minimum wage to workers who earn tips, which the Fair Labor Standards Act allows as long as gratuities bring earnings up to standard minimum wage, or $7.25. The difference between standard minimum wage and the lower tipped wage is called a tip credit because tips from customers are credited toward an employer's minimum wage obligation, reducing the amount it must pay to as low as $2.13 per hour. …

Rule Exposes Restaurants to Tip Credit Claims

The Restaurant Law Center and the Texas Restaurant Association — the legal arm and Lone Star State affiliate, respectively, of the National Restaurant Association — will argue to U.S. District Judge Robert Pitman that the DOL's position that an individual may lose tipped worker status is a misguided interpretation of the FLSA's tip credit provision. Moreover, the DOL doesn't have authority to issue the rule because there is no ambiguity in the statute that the agency needs to clarify with regulations, according to the business groups.

They asked Judge Pitman in a Dec. 17 motion for a nationwide preliminary injunction to block the DOL from implementing and enforcing the rule. Their suit began two weeks earlier when they filed a complaint alleging the rule doesn't accord with the FLSA's tip credit provision, the Administrative Procedure Act's requirement for well-reasoned agency actions, and the U.S. Constitution's separation of powers, which prohibits the executive branch from taking legislative action that may only be carried out by Congress.

Paul DeCamp, a member of Epstein Becker Green who represents the business groups, told Law360 that tipped workers at most businesses don't come close to spending 30 uninterrupted minutes or 20% of their time on side work. Ensuring compliance with the rule requires minute-by-minute accounting of workers' time that isn't realistic in a busy restaurant.

"The challenge here is less about complying with the regulation and more about avoiding expensive litigation over claims that you've violated the regulation," said DeCamp, who is co-chair of Epstein Becker Green's wage and hour practice group. He was administrator of the DOL's Wage and Hour Division under former President George W. Bush.

In FLSA litigation, an employer's costs can multiply rapidly because most courts use a lenient standard for certifying a collective action, DeCamp said. In a certified collective action, the defendant must produce names and contact information for other workers who may be similarly situated, so the lead plaintiff can offer them an opportunity to join the suit.

Even if a worker's case is not victorious, the cost of defending and possibly settling it can grow as the size of the collective class increases. Large operators are better equipped to handle the expense than small chains or single-location restaurants, for whom litigation can be devastating, DeCamp said.

"One lawsuit can put them out of business," he said. "Just the transaction costs of defending the lawsuit." …

The business groups are represented by Paul DeCamp, Kathleen Barrett and Greta Ravitsky of Epstein Becker Green and Angelo Amador of the Restaurant Law Center.


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