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Tip Credit 80/20 Rule After Recent Nationwide Invalidation: Employer Impact, State Law Interaction, Policy Challenges

This program is cancelled

A live 90-minute CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Wednesday, December 11, 2024 (in 4 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST


This CLE webinar will examine the recent Fifth Circuit decision in Restaurant Law Center v. U.S. Dept. of Labor (2024) that vacated the DOL's 2021 FLSA tip credit "80/20" rule on a nationwide basis and address the impact this will have on employers. The panel will discuss best practices for helping employers develop FLSA compliant policies to mitigate the risk of federal enforcement action and address interaction with possibly conflicting state laws.

Description

Employers in the hospitality industry have experienced whiplash in recent years in relation to the DOL's "80/20" tip credit rule, which limits when employers may claim a tip credit for tipped employees under the FLSA, as the agency's interpretation has varied under different presidential administrations making compliance more difficult. The Fifth Circuit recently invalidated the DOL’s most recent 2021 rule, impacting employers nationwide.

The DOL’s 2021 rule divided a tipped employee's work into three categories: (1) tip producing work; (2) directly supporting work; and (3) work that is not part of a tipped occupation. Under the rule, if the tipped employee performed directly supporting work for more than 20 percent of the hours in a workweek or more than 30 consecutive minutes, employers were prohibited from taking the tip credit for the time worked in excess of the 20 percent threshold or 30-minute threshold. The tip credit could not be taken for work that is not part of a tipped occupation.

The 2021 rule faced immediate legal challenges and was recently vacated by the Fifth Circuit in Restaurant Law Center v. U.S. Dept. of Labor (2024). The court found the final rule to be inconsistent with the FLSA's text that is focused on whether the employee is engaged in a tip-producing occupation and regularly and customarily receives more than $30 a month in tips as opposed to focusing on whether individual duties produce tips.

Counsel should understand what this decision may mean for their employer clients, including any interaction with state laws and for wage and hour policy development moving forward.

Listen as our expert panel examines the Fifth Circuit's recent decision vacating the DOL's latest version of the "80/20" rule and discusses the impact on employers. The panel will also offer best practices for advising clients on compliance measures.

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Outline

  1. Introduction: FLSA tip credit overview
  2. History of the "80/20" tip credit rule
    1. DOL fluctuating guidance
    2. Legal challenges
  3. Restaurant Law Center v. U.S. Dept. of Labor (5th Cir. 2024)
    1. Vacating "80/20" tip credit rule
  4. Interaction with state laws
  5. Impact on employers
    1. Wage calculation
    2. Policy creation
  6. Best practices for compliance

Benefits

The panel will review these and other important considerations:

  • For what reasons did the Fifth Circuit vacate the DOL's 2021 "80/20" tip credit rule?
  • How may this impact employer wage and hour policy development, and what are best practices for helping clients develop FLSA compliant policies?
  • What state law considerations should counsel and their clients take into account when developing wage and hour policies?
  • How may the Fifth Circuit's decision impact other circuit court decisions, and what could be the resulting effect on employers?

Faculty

Charner, Y. Jed
Y. Jed Charner

Attorney
Jackson Lewis

Mr. Charner represents employers in employment litigation and workplace law matters, including preventive advice and...  |  Read More

Einstein, Joy
Joy C. Einstein

Shareholder
Shulman Rogers

Ms. Einstein counsels employers concerning employee misconduct, workplace harassment, compensation and leave issues,...  |  Read More

Vish, Victoria
Victoria L. Vish

Attorney
Ogletree Deakins

Ms. Vish is a litigator and advisor who helps companies reduce risks and resolve employment challenges. She...  |  Read More