Welcome

DOL Tips Rule Likely Illegal, Democratic State Lawyers Say (1)

Dec. 10, 2019, 9:07 PMUpdated: Dec. 10, 2019, 11:10 PM

A coalition of Democratic state attorneys general is laying the groundwork for a potential lawsuit to try to halt a new Labor Department tip credit regulation.

The top elected attorneys from 18 states plus Washington, D.C., in a recent letter to Labor Secretary Eugene Scalia slammed a proposal to rescind a prior tips rule. They said the proposed changes to minimum wages for tipped employees would hurt restaurant workers’ incomes and likely violates federal law governing regulations.

The attorneys general submitted their letter the day before the public comment period closes on the rule, which the department proposed in October. They focused their ire on a provision that would withdraw a DOL rule declaring that when tipped workers, such as servers and bartenders, spend at least 20 percent of their workweek on tasks that don’t generate tips, such as rolling silverware, they are entitled to the full minimum wage of at least $7.25 per hour, rather than the lower minimum for tipped workers of $2.13.

The proposed rule would allow businesses to pay tipped workers $2.13 an hour, regardless of the amount of time spent on non-tipped duties. That is, provided the workers perform “related, non-tipped duties contemporaneously with or a reasonable time immediately before or after performing the tipped duties.”

The proposed rule, if finalized, “would likely violate the Administrative Procedure Act” for being “arbitrary and capricious,” the state lawyers argue. That’s because it lacks sufficient justification and would have a potentially “devastating impact” on workers, they said. The attorneys general also said the rule should include an economic analysis estimating the rule’s effect on workers’ wages.

It’s not clear if the AGs intend on filing suit after the rule is finalized. A spokeswoman for Illinois Attorney General Kwame Raoul, who spearheaded the coalition along with the top state lawyers in Pennsylvania and Massachusetts, declined to say whether Raoul plans to challenge the rule in court.

“AG Raoul is committed to protecting workers by ensuring they receive fair, livable wages for working fair hours, and he will continue to evaluate all options for doing so,” spokeswoman Tori Joseph told Bloomberg Law.

Industry groups have supported the agency’s about face on the so-called “dual jobs” or ’80/20" policy. That includes the employer association Center for Workplace Compliance.

“We agree that the prior interpretation proved challenging to implement and that the current approach, which does not focus on the specific amount of time spent in various tasks, will be easier to understand and will make compliance simpler,” the center said in a letter backing the rule.

“As part of the rulemaking process, the Department will consider all comments received in the development of the final rule,” a DOL spokeswoman said in a statement.

(Updated with DOL statement)

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.