Takeaway: The U.S. Department of Labor's 80/20 rule continues to be a flashpoint among the federal courts, as well as employers. The 5th Circuit's reversal of the district court's ruling denying a preliminary injunction—and its order to further consider this challenge to the rule—is another step on the road to determining the validity of the 80/20 rule.
A district court erred in denying a preliminary injunction against a revised U.S. Department of Labor (DOL) regulation concerning how the federal minimum wage applies to tipped employees, the 5th U.S. Circuit Court of Appeals recently ruled, reversing and remanding for further consideration.
In late 2021, the DOL revised and added to a Trump administration regulation about when an employee works in a tipped occupation under 29 U.S.C. Section 203(t). The federal minimum wage is $7.25 per hour, with an exception for tipped employees who may be paid as low as $2.13 per hour, provided their tips fill out the rest of the minimum wage. To claim the tip credit under the DOL's rule, employers must ensure that tipped employees are not spending more than 20 percent of their time on work that supports tip-producing activity but does not itself generate tips, or more than 30 minutes continuously performing such duties.
The plaintiffs, a restaurant association and its affiliated legal group, claimed that restaurants in Texas would suffer irreparable harm in unrecoverable compliance costs incurred in complying with the revised rule. The...
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