Paul DeCamp Quoted in “Tips on Tipping”Restaurant News Resource May 13, 2021
Paul DeCamp, Member of the Firm in the Employment, Labor & Workforce Management practice, in the firm’s Washington, DC office, was quoted in Restaurant News Resource, in “Tips on Tipping,” in conjunction with his recent webinar for the Restaurant Law Center, “The Future of Tipping Under the Biden Administration.”
Following is an excerpt:
New federal tipping regulations took effect April 30, including rules about tip sharing. Meanwhile, the Department of Labor is considering additional changes to tipping regulations and Congress is debating the Raise the Wage Act, which would eliminate the tip credit. …
What is the “tip credit”?
The Fair Labor Standards Act requires that restaurant employees earn minimum wage or higher. The tip credit allows restaurants to satisfy a portion of the minimum wage obligation through tips. No tipped employee ever makes less than the required minimum wage. [Tipped restaurant employees on average make between $19-$25/hour, according to National Restaurant Association research.] Seven states disallow the tip credit under state law: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.
Can tips received by front-of-the-house (FOH) employees be shared with back-of-the house (BOH) employees?
A 1974 FLSA amendment clearly states that FOH/BOH tip sharing is impermissible if the restaurant takes a tip credit for any of the employees involved.
But what if a tip credit isn’t applied?
As of April 30, DOL regulations now permit tip-sharing with BOH employees, such as dishwashers or line cooks, as long as the restaurant is not taking a tip credit for any of the employees.
What is the 80/20 rule?
This DOL rule prohibits restaurants from taking a tip credit for time an employee spends on side work tasks—such as rolling silverware or setting up for a shift—if that time exceeds 20% of the employee’s working time.
This discussion is also featured in FSR Magazine, in "What’s the Fate of Tipping Regulations in the Restaurant Industry?"