On Friday, the US Department of Labor (DOL) released its final rule governing employees who tip. The DOL has upheld sweeping changes to the regulation of employees paid with tip credit, which it introduced last June in its Notice of Proposed Regulatory Proposal (NPRM). Building on the recent decision of the 11th Circuit in Rafferty v. Denny’s, Inc., which adopted the 80/20 rule, the DOL has changed little from the NPRM despite a considerable decline in industry interests. The DOL has codified the 80/20 rule and now limits the performance of duties of tip employees who directly support tip production work to 20 percent of the work week and no more than 30 continuous minutes. Work that does not meet these limits and work that is not considered tipping or direct support work must be paid at full minimum wage.
Amendments proposed in the NPRM – Obligations
The NPRM has proposed replacing the regulatory framework that determines which tasks are part of the profession of the tipped employee. Specifically, the NPRM clarified that a tip employee who performs tasks that are not part of the tip employee’s profession is excluded from the tip credit salary because he no longer meets the requirement. to work in a “tipping profession”. See 29 USC § 203
The devil was in the detail, as the DOL proposed to change the current wording of the regulations so that the tasks that are part of the occupation of the tipped employee are no longer those that are “related” to the occupation. tipping, but only those that “directly support the work of tipping.” Compare 29 CFR § 531.56 (e) with Prop. DOL Reg. § 531.56 (f) (1). This was defined in the proposed final rule as “assists tipped employees in performing work for which the employee receives tips”. See Reg. prop. § 531.56 (f) (1) (ii).
Final rule changes – Functions
The DOL amended the definition of tipping work in the final rule to include “any work performed by a tip employee who provides a service to customers for which the tip employee receives tips.” 29 CFR § 531.56 (f) (2) (i). The definition of direct support work was similarly changed in the final rule to include “work performed by an employee tipping in preparation or otherwise assisting customer service work producing tips.” . 29 CFR § 531.56 (f) (3) (i). The definition of work that is not part of the tipping occupation has also been changed to reflect the customer-centric definition of tipping work. See id. at 531.56 (f) (5).
The DOL asserts that the definition of tipping work should be interpreted broadly. 86 Fed. Reg. 60 114, 60 115 (October 29, 2021). In addition, the DOL explained that it intended the work of producing advice “to encompass any task logically included within the scope of that work of producing advice”. Username. at 60,126. The DOL clarified that tip production work “includes all aspects of customer service for which the tip employee receives tips.” Username. at 60,128. In contrast, the DOL explained that direct support work “is either done in preparation or assists customer service work producing tips.” Username. at 60,126. For guidance on interpretation, the DOL suggests that employers and employees ask “if the task is a job that provides a service to customers for which tipped employees are tipped” to determine whether the task is a job that provides a service to customers. this is a tipping job, and asking “whether the task is either performed in preparation for or otherwise assisting the tipping customer service job” to determine whether it directly supports the job. While this may or may not be a useful exercise, the DOL provides both definitions with an increased number of examples, adding more clarity.
The DOL provides many examples in the final rule as well as in the specific amended regulations. Several instructive examples are repeated here:
- A bartender’s tip-generating job of making drinks can usually consist of talking to the customer sitting at the bar and making sure a customer’s favorite game is shown on the bar’s television. 86 Fed. Reg. at 60 128.
- A waiter’s tip-making job includes bringing a high chair and a coloring book for a baby sitting at their table. Username.
- A bartender who collects a particular beer from storage for a specific customer request is doing tip production work, corn a bartender who retrieves a case of beer from the reserve to store the bar in order to serve customers directly performs support work. Username.
- A waitress who folds napkins while waiting for her last table to pay her bill does support work directly. Username.
- A waiter wiping up a spill on a customer’s table is doing tip-generating work, but a waiter assigned to cleaning around the beverage station is directly doing support work. Username.
- A busser resetting tables during table service between customers does tip-generating work, but a busser setting tables, folding napkins, and rolling silverware before the restaurant opens does the support work directly. Username.
- Servers assigned to general tasks such as filling containers with “to be completed” condiments. . . lulls in customer service ‘directly perform support work. Username. at 60,133.
Pandemic changes in food services
In response to industry feedback, the DOL acknowledged that the pandemic has changed the nature of tipping work and the types of tasks performed for clients. Specifically, the DOL asserted that its modified customer-centric definition of tip-producing work should incorporate changing tasks such as waiters taking take-out orders over the phone and offering the customer a take-out meal. Username. to 60,126.
Codified 80/20 rule
The 80/20 rule, which limited an employee’s no-tip duties to 20 percent of the employee’s total time during the work week, originally proposed in the NPRM, is now codified in the final rule. The qualifications for a tipping trade provided for in the Final Rule include the requirement that work that directly supports tipping work not be performed for a “substantial period”. See 29 CFR § 531.56 (f) (1) (ii). The DOL used the 80/20 rule to define a “substantial period”. Identifier. at 531.56 (f) (4). As a result, the final rule requires tip employees to work no more than 20 percent of their total time during the work week on tasks that directly support the tipping job. Employees who exceed this maximum threshold must be paid the full minimum wage “to directly support work that exceeds the 20 percent tolerance”. Identifier. at 531.56 (f) (4) (i).
Codified 30-minute rule
The requirement that tipping employees not perform tasks that directly support the tipping work for a “substantial period” was defined in the Final Rule not only by the constraints of the 80/20 Rule, but by an additional requirement which, if such work exceeds 30 continuous minutes, “the employer cannot take a tip credit for any duration exceeding 30 minutes. ” Identifier. at 531.56 (f) (4) (ii) (emphasis added). The italicized portion of the above section reflects a change in the final rule described by the DOL as a “tolerance for the first 30 minutes of continuous work without tips, directly supporting” allowing the employer to take tip credit for “this time not to exceed 30 minutes, subject also to the limit of 20 percent of the work week. 86 Fed. Reg. to 60 136. In addition,”
The final rule will come into effect on December 28.
The bottom line
The NPRM’s changes to the final rule do not significantly change the overhaul of the regulation of high-tech employees that is now codified by the DOL. The DOL has both narrowed the scope of the tasks that can be performed by a tipped employee and set a limit on how long those tasks can be performed. Thus, the tasks that a tip employee can perform as part of the profession of tip employee have clearly been limited by the final rule. While a broader definition of customer-centric tip production work is helpful, it still does not reflect the dynamic nature of the jobs of many tip employees. As the hospitality industry grapples with the realities of COVID-19 and labor shortages, the final rule creates another hurdle.