More than a year after the US Department of Labor announced the return of the time-keeping nightmare that is the 80/20 rule with new tweaks that encourage even more litigation, the agency just released new guidance that simply adds to the morass facing employers whose industries rely heavily on this method of payment. Specifically, USDOL released two new fact sheets on March 3 providing guidance on paying tipped employees and those with dual jobs while updating the Field Operations Handbook to incorporate guidance on the regulations issued in late 2021. What do you need to know – and what are the five steps you should consider taking?
Tip Credit Overview
If you are reading this insight, you probably either have tipped employees or are familiar with the tip-credit. This system allows employers to pay employees a direct cash wage of less than the federal (or applicable state) minimum wage and rely upon tips provided by customers to make up the required minimum payment. For nearly a decade, use of the tip-credit has been narrowed by the US Department of Labor, following public statements that many in places of political power disfavor the practice and would like to eliminate it entirely.
The last few years have seen much activity in this area. USDOL issued a rule that took effect in November 2021 that expanded the agency’s authority to assess penalties against employers who violate the tip provisions of the Fair Labor Standards Act (FLSA). It also clarified when managers and...
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