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DOL proposal would limit nontipped tasks by tipped workers

3 minute read

The Department of Labor headquarters in Washington, D.C., U.S., May 13, 2021. REUTERS/Andrew Kelly

  • Only for tasks directly related to tipped work that take less than 30 minutes
  • Proposal withdraws business-friendly Trump-era rule

(Reuters) - The U.S. Department of Labor unveiled a proposal Monday that would prohibit businesses from paying workers the $2.13 tipped minimum wage for nontipped tasks that take more than 30 minutes or are not directly related to their tipped work.

DOL's Wage and Hour Division (WHD) in a proposal in the Federal Register moved to withdraw a Trump-era rule that would have made it easier to pay the lower minimum wage for nontipped work, and replace it with the more strict standard.

The proposal would allow restaurants and other businesses to only pay the tipped minimum wage for tasks that "directly support tip-producing work, provided the directly supporting work is not performed for a substantial amount of time."

WHD said a substantial amount of time should be defined as more than 30 consecutive minutes or 20% of the hours an employee works in a given week.

The agency in the proposal said it was important to provide a clear limitation on the amount of nontipped work that tipped employees can perform and still be considered to be in a tipped occupation.

The proposal will be formally published on Wednesday, kicking off a 60-day public comment period.

Jessica Looman, the deputy administrator of WHD, said in a statement that the proposal helps ensure that tipped workers receive wages appropriate for the work they perform.

“Tipped workers are among those who continue to be hardest hit as we emerge from the pandemic, and the Wage and Hour Division continues to prioritize protecting these essential front-line workers,” she said.

The Trump administration rule, which was adopted in December, said employers are not required to pay the standard minimum wage when nontipped tasks are performed contemporaneously or immediately before or after workers' primary, tipped duties, regardless of how much time they take.

Advocacy groups and many Democrats had criticized that rule, saying it would allow some employers to exploit tipped workers by paying them the lower minimum wage while performing tasks, such as washing dishes, that had no bearing on the amount of tips they earn.

Many business groups supported the December rule, saying that tracking the exact amount of time workers spent on specific tasks was difficult if not impossible, and that most nontipped jobs performed by workers directly supported their tipped work.

Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.

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