Recently the U.S. Department of Labor (DOL) responded to a request for an opinion clarifying how tipped employees can meet the 7(i) exemption. While the Fair Labor Standards Act (FLSA) requires nonexempt employees (including tipped employees) to be paid at least minimum wage for all hours worked and overtime (at a rate of one and one-half times the employee’s regular rate) for over forty hours per week, the 7(i) exemption excludes commission-based employees from this requirement if they meet three criteria: the employee must be employed by a retail or service establishment; the employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked; and more than half the employee’s total earnings in a representative period must consist of commissions.

Quick Hits

• The DOL explained in a recent opinion letter that an employee of a qualifying retail or service establishment must be paid more than one and one-half times the federal minimum wage in order to satisfy the minimum pay standard in section 7(i)(1) of the Fair Labor Standards Act.
• The DOL explained that tips are not commissions under section 7(i) unless the employee is located in certain jurisdictions or if the employer takes a tip credit, in which case the portion of an employee’s tips used to satisfy the tip credit would be considered compensation.

The inquiry to the DOL was twofold: (1) does an employer use the federal...

Read Full Story: https://news.google.com/rss/articles/CBMifkFVX3lxTFBVQkZHMlRBYzhXRHFXWGRrMGhS...