News & Announcements

DOL Changes Its Position on FLSA’s Tip Credit

Posted Tuesday, February 26, 2019 6:27 am

On February 15, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) published Field Assistance Bulletin No. 2019-2 addressing a recent change to the Field Operations Handbook, concerning WHD’s interpretation about whether employers can take tip credit for tipped workers doing untipped work.

Background (Prior Interpretation)

The Fair Labor Standards Act (“FLSA”) allows employers to take a tip credit for employees in tipped occupations such as servers and bartenders.  The tip credit offsets an employer’s obligation to pay employees a minimum hourly wage.  Previously, WHD excluded from the tip credit any time that an employee in a tipped occupation spent performing related, non-tipped duties in excess of 20 percent in the workweek.

New Interpretation

Now, consistent with WHD Opinion Letter FLSA2018-27 (Nov. 8, 2018), an employer may take a tip credit for any duties that an employee performs in a tipped occupation that are related to that occupation and either performed contemporaneous with the tip-producing activities or for a reasonable time immediately before or after the tipped activities.

“Related To”

To determine whether a tipped employee’s non-tipped duties are “related to” the tipped occupation, WHD staff will consult the examples in 29 CFR 531.56(e) as well as the Occupational Information Network (O*NET).  Duties will be considered “related to” the tipped occupation when listed as “core” or “supplemental” under the “Tasks” section of the “Details” tab for the appropriate tip-producing occupation in O*NET.

Retroactively Applicable

Notably, this bulletin instructs WHD’s staff to apply the new interpretation in any open or new investigation, even if the investigation concerns work performed prior to the issuance of WHD Opinion Letter FLSA2018-27 on November 8, 2018.

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