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Restaurant Industry Sues Labor Dept. Over Tipped Wage Policy

July 9, 2018, 2:08 PM

The Trump Labor Department’s battle with the restaurant industry over tipped employee wages now enters a new legal frontier.

The Restaurant Law Center sued the DOL late July 6 for maintaining an Obama administration enforcement policy that mandated that tipped workers be paid the full minimum wage for the time they spend on tasks that don’t generate tips, provided those side duties make up at least 20 percent of their weekly hours. The RLC, the litigation arm of the National Restaurant Association, is asking a federal court in Texas to invalidate the policy as arbitrary and capricious under the Administrative Procedure Act.

Restaurant workers such as bartenders and servers are owed at least $2.13 per hour, depending on jurisdiction, provided their hourly pay plus tips exceeds the full minimum wage of $7.25 per hour. But the DOL’s Wage and Hour Division states in its field operations handbook that when at least 20 percent of the weekly hours are spent on such side tasks as rolling silverware or filling salt and pepper shakers, the restaurant owes those workers the higher minimum rate for that time.

“The Obama Administration quietly slipped an overly restrictive provision on dual-jobs into an internal agency handbook without notice to the public or an opportunity for comment in violation of the Administrative Procedure Act (the “APA”). We are asking the Court to set this provision aside and enjoin its enforcement,” Angelo Amador, the RLC’s executive director, said in a statement. “The Obama-era dual-jobs provision in the Department of Labor’s Field Operations Handbook is arbitrary, capricious, contrary to the Fair Labor Standards Act, promulgated in violation of the APA, and a violation of separation of powers.”

A DOL spokesman referred Bloomberg Law to the Justice Department, which didn’t immediately respond to a request for comment.

The department and the restaurant industry have had a roller coaster relationship thus far in the Trump White House. Restaurants saluted the DOL’s rule proposal last December to rollback a 2011 rule declaring tips are the property of employees and can’t be shared with kitchen staff. But following heated controversy over the omission of an economic analysis in that proposal, the DOL reached a compromise with Democratic lawmakers to adopt a law declaring employers can’t partake in a tip pool.

The restaurant association opposed a provision in that law allowing for penalties to be assessed against employers that are unintentionally out of compliance.

The case is Restaurant Law Center v. U.S. Dept. of Labor, W.D. Tex., No. 18cv567, complaint filed 7/6/18.

To contact the reporter on this story: Ben Penn in Washington at

To contact the editors responsible for this story: Chris Opfer at