Two restaurant groups urged a Texas federal judge to prevent a new U.S. Department of Labor rule splitting what tasks are considered tipped or nontipped work from going into effect, saying the rule is illegal and will hurt the industry.
The Restaurant Law Center and the Texas Restaurant Association said Friday the DOL overstepped its authority when it added a new rule to the Fair Labor Standards Act limiting how many hours of nontipped work an employee could perform while earning the lower minimum wage of $2.13 per hour. The groups say the new rule should not go into effect on Dec. 28 as expected because it conflicts with the FLSA and goes against the Administrative Procedure Act.
"The department is simply making an end-run around the statute because it does not like Congress' legislative choice," the groups say. …
"The department is now attempting to rewrite the tip credit provision of the FLSA to dissect these occupations into different categories of job duties, and dictate that the tip credit is available for certain of an occupation's duties but not for others," the groups said.
The groups further argued the DOL tries "parsing a single occupation into multiple jobs" by dividing employees' tasks into tip-producing and tip-supporting work without factual or legal support.
"Nothing in the statute or the department's 1967 regulation suggests, or even hints at, an intent to dissect a tipped employee's 'occupation' into job duties which directly result in tips (such as serving food or a drink) and job duties which may not result directly in tips (such as preparing a plate of food or washing a beer mug)," the groups said.
The DOL also failed to account for how devastated restaurants have been during the coronavirus pandemic and its rule would represent another financial impact on the industry, the groups said. …
In October, the DOL issued the final version of the rule, codifying the 80/20 principle and introducing the 30-minute threshold. The DOL also added the tip-producing and tip-supporting work concepts in its October rule.
Restaurant Law Center Executive Director Angelo I. Amador, who is representing the center, said Monday that under the rule it would be impossible for restaurants to track whether employees are producing tip-producing or tip-supporting work.
"It is not that easy because if you end up in litigation it would be impossible [to track that time]. It's a lose-lose situation," Amador said.
Paul DeCamp of Epstein Becker Green, which is representing the groups, reiterated that the DOL's rule goes against the FLSA.
"Congress passed a law that allows employers to take tip-credit under certain circumstances. The department is trying to regulate those circumstances out of existence," DeCamp said.
DeCamp said that there will be no way for employees to track how much time they spent performing each task, increasing litigation that would hurt small businesses.
"As a practical matter [the rule] will force restaurants to not have employees doing side work. Otherwise, there is going to be litigation, and with a lot of restaurants getting hit with one of these lawsuits can bankrupt them," DeCamp said.
Emily Williams Knight, president and CEO of the Texas Restaurant Association, reiterated that sentiment, saying in a statement that "There is no practical way for an employer to keep the task-by-task records the administration's regulations would demand to avoid potential liability."