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DOL Publishes Final Tips Rule Pushed by Restaurant Owners

Dec. 22, 2020, 7:01 PM

The U.S. Department of Labor published a final rule that allows businesses to pay more tipped workers the lower minimum wage of $2.13 an hour.

The new rule released Tuesday allows employers to pay the lower minimum wage for tipped workers regardless of how much time workers spend on tasks that don’t generate gratuities. Previously, tipped workers who spent at least 20% of their workweek on duties that don’t produce tips—such as rolling silverware into napkins or cleaning—were entitled to the full minimum wage of $7.25 per hour for that time. The interpretation was first added to DOL’s enforcement handbook in 1988, during Ronald Reagan’s administration.

The Trump administration’s rule faces an uncertain future once President-elect Joe Biden takes office Jan. 20. Biden’s Labor Department is likely to return to the pre-Trump interpretation of how to pay for non-tipped duties, and Democratic state attorneys general have indicated they’d file a lawsuit arguing the rule violates the Administrative Procedure Act.

A separate, less-controversial aspect of the rulemaking would clarify a 2018 policy rider, passed into law in a government spending bill, that prohibits employers, including supervisors and managers, from participating in tip-pooling arrangements.

The initial DOL proposal in 2017 became engulfed in controversy. This month, the agency’s inspector general released the findings of a three-year investigation, which concluded that the Department of Justice urged DOL to bury an economic analysis projecting the rule’s effect on workers’ wages.

To contact the reporters on this story: Ian Kullgren in Washington at ikullgren@bloombergindustry.com; Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editor responsible for this story: Karl Hardy at khardy@bloomberglaw.com

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