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Proposed Tip Credit Regulations Place Further Litigation on the Menu | Seyfarth Shaw LLP


is made final, the 80/20 rule will be back, and with a vengeance.  Employers who take a tip credit for their tipped employees will have to ensure that those employees spend no more than 20 percent of their time in a workweek, and no more than 30 minutes of uninterrupted time, on side work that does not itself generate tips.
Tip credit regulations always have been a murky stew for employers.  Congress enacted the tip credit provisions to the FLSA to alleviate some of the financial burdens on industries that employ tipped workers.  At the time, the goal was simple: count a portion of customers’ gratuities for service employees toward the minimum wage. Yet, over the years, whether a tipped employee is eligible for tip credit has been a hotly contested issue both in the courts and in various presidential administrations’ rulemakings.  Just last week, the United States Department of Labor issued a Notice of Proposed Rule Making (NPRM) which creates greater limits on an em ....

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