(Reuters) - Some restaurants will face "bankruptcy-level litigation" if a Biden administration rule regulating the way tipped workers are paid is not blocked, a lawyer for two trade groups told a U.S. appeals court on Tuesday.
The 2021 rule saddles businesses with the impossible task of tracking the amount of time workers spend on duties that generate tips and those that do not and exposes them to class action lawsuits for not doing so, the lawyer, Paul DeCamp, told a 5th U.S. Circuit Court of Appeals panel in New Orleans.
The U.S. Department of Labor (DOL) rule says workers must be paid the federal minimum wage of $7.25 an hour, and not the $2.13 tipped minimum wage, for non-tipped tasks that take up more than 20% of their time or 30 consecutive minutes.
DeCamp, of Epstein Becker & Green, represents the Restaurant Law Center and Texas Restaurant Association. The groups say in their challenge to the rule that federal wage law only distinguishes between separate occupations, and not different tasks performed as part of the same job.
U.S. District Judge Robert Pitman in Austin, Texas in February declined to block the rule pending the outcome of the lawsuit. He said the groups had not shown the rule would cause the "irreparable harm" necessary to warrant blocking it.
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