The Department of Labor has decided to move forward with a rule that allows front-of-house workers who don’t work under a “tip credit” to share their tips with back-of-house workers.
The provision is viewed as a win for restaurateurs in terms of narrowing the pay gap between the front and back of the house. The tip rule also prevents employers, including managers and supervisors, from receiving any tips, regardless of whether the employee takes a tip credit—a guideline that protects tipped employees.
These measures were scheduled to start March 1, but they were delayed until April 30 to provide the DOL with “additional time to consider issues of law, policy, and fact.” After a review, the DOL is allowing these rules to move forward.
The department also delayed the elimination of the “80/20” rule, which mandates that a tipped employee can’t spend more than 20 percent of their time performing non-tipped duties and still take a tip credit. As part of the new rule, a restaurant can take a tip credit for time that a tipped employee spends performing non-tipped duties as long as said duties are related to the tipped occupation and are performed contemporaneously with tipped duties or within a “reasonable time immediately before or after” tipped duties. However, the final rule doesn’t clearly define what “reasonable time” would be.
The department is proposing to further delay its effect until December 31. The DOL said 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 Tips final rule.”
“Tipped workers are among those hardest hit amid the pandemic, and the Wage and Hour Division has made protecting these essential frontline workers a priority,” Wage and Hour Division Deputy Administrator Jessica Looman said in a statement. “The proposals we announced today ensure that we consider all of the circumstances in today’s rapidly changing workplace. These essential workers deserve our careful and thoughtful consideration as we craft and implement rules that affect their well-being.”
Heidi Shierholz, a scholar at the Economic Policy Institute and former chief economist at the Labor Department under President Barack Obama Obama, told The Hill in December that “‘Reasonable time’ is not defined, and its ambiguity will make it difficult to enforce, providing employers an immense loophole and leaving workers behind.” She predicted the change could cost tipped workers a collective $700 million a year, and shift more jobs from non-tipped to tipped.
