Bar and restaurant owners, take note: things might get more complicated for your managers thanks to proposed changes to federal tip credit rules.
The U.S. Department of Labor in June proposed changes that would require employers to closely monitor tipped employees’ work and sort it into three categories: “time spent on tasks that produce tips, time spent on tasks directly supporting tip-producing work and time spent on tasks that are not part of the tipped occupation.”
Sounds like a pain in the ass.
For those unfamiliar, current Fair Labor Standards Act (FLSA) rules state that tipped employees can be paid as little as $2.13 an hour while the employer claims a credit against the tips earned by the employee. The claimed credit goes toward meeting the employer’s obligation to pay the minimum wage.
Under the proposed changes, restaurants could only take advantage of the tip credit when workers do tasks that are part of their tipped occupation. So far, it appears the only way for the DOL to gather that information would be for a management-level employee to record and submit it.
Labor advocates have argued for the dismissal of the tip credit, as it’s an antiquated practice, dating back to the 19th Century when it was created to make jobs for Civil War soldiers and former slaves.
Further, the proposed changes would also limit when employers can take the tip credit if employees spend too much time on work that the DOL considers not part of their tipped occupation.
For example, work that directly supports the job of a restaurant server would include folding napkins, preparing silverware and garnishing plates. Sweeping under tables, however, would only support tipped work if it’s done in the dining room.
Stands to reason, such detailed tracking requirements will be burdensome to an already understaffed industry.
The Department of Labor has created a form for members of the public to comment on the proposed rule change. The agency will continue to accept comments through August 23.
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This article appears in Aug 11-24, 2021.
