On June 21, the U.S. Department of Labor (DOL) announced two Notices of Proposed Rulemaking (NPRM) related to tipped workers.

The first NPRM proposes to withdraw and re-propose portions of the 2020 final rule that narrowed the circumstances in which the department can assess civil money penalties for violations. The department is also seeking comments on whether to revise the portion of the 2020 final rule that addresses “managers or supervisors” to better understand those who also engage in tipped work.

The second NPRM proposes to extend further the effective date of three portions of the 2020 final rule to Dec. 31, 2021. They are two portions that address the assessment of civil money penalties and the portion of the final rule that addresses the application of the FLSA tip credit to tipped employees who perform both tipped and non-tipped duties (i.e., dual jobs). The additional eight-month extension would provide the department the opportunity to evaluate additional information about the questions of law, policy and fact raised by these portions of the 2020 final rule.

Under the proposed rule an employee is only engaged in a tipped occupation when the employee either performs work that produces tips or performs work that directly supports the tip-producing work, provided that the directly supporting work is not performed for a substantial amount of time. For example, a server in a restaurant may be engaged in both tip producing work (waiting on tables) and tip supporting work (preparing tables). However, other tasks, such as helping in the kitchen would not qualify as tip producing or supporting work.

It is important for businesses with tipped employee to property identify and track which work qualifies for the tip-credit under the Fair Labor Standards Act (FLSA). Where work fails to qualify, the employee must be paid at least the applicable minimum wage rather than the reduced rate for tipped employees.

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