Tip credit controversies are alive and well as employers seek clarity on the USDOL's so-called 20% Rule regarding "tipped employees" engaging in activities that do not, or at least not directly, produce tips.
Employers should be aware of how we got to the recent FLSA amendment regarding tips, and have a solid understanding of their own tip-related practices, before trying to determine where to go from here.
Today's federal budget included a rider to amend the FLSA and prohibit an employer from keeping tips received by its employees, regardless of whether or not the employer takes a tip credit.
The public comment period for the USDOL's proposed rescission of the 2011 tip regulations has closed. Regardless of where data and "fairness" concerns might lead one, the fundamental legal issue is that the agency's authority does not extend to circumstances where an employer is not taking the tip credit.
The U.S. Department of Labor has now proposed regulatory revisions that would in effect rescind the prior administration's tip-retention restrictions as to employers who do not rely upon the FLSA tip-credit.
The U.S. Department of Labor has sought the Office of Management and Budget's approval of a proposed rescission of tip-pooling restrictions as to employers who do not rely upon the FLSA tip-credit.
The U.S. Department of Labor has announced that a forthcoming Notice of Proposed Rulemaking will seek to "rescind the current restrictions on tip pooling" by employers who do not rely upon the FLSA tip-credit.
Despite what a couple of recent court decisions have suggested, it appears that neither an individual nor the U.S. Department of Labor is permitted to file an FLSA lawsuit based simply upon the "tips are always the employee's property" position that USDOL has taken.
The 11th Circuit U.S. Court of Appeals has ruled that a tipped employee for whom no FLSA "tip credit" had been taken, and to whom all FLSA wages due had been paid, had no FLSA claim against her employer with regard to its allegedly having converted some of her tips to its own uses.
Employers must take into account the wage-hour requirements and restrictions of all jurisdictions in which they employ tipped workers, as well as how these provisions interact with the FLSA's requirements.