Hey Compliance Warriors!
On October 28, 2021, the U.S Department of Labor announced publication of a final rule (Tips Dual Jobs final rule) that sets reasonable limits on the amount time an employer can take a tip credit when a tipped worker isn’t doing tip producing work. It clarifies that an employer may take a tip credit only when an employee is performing work that is part of a tipped occupation, specifically; performing work that is tip producing or performing work that directly supports work that is tip producing for a limited amount of time.
The Final Rule also amends the provisions of the Executive Order 13658 regulations, which address the hourly minimum wage paid by contractors to workers performing work on or in connection with covered federal contracts consistent with the amendments to the dual jobs regulations.
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Under the final rule, an employer can take a tip credit only when the worker is performing tip producing work or when:
- A tipped employee performs work that directly supports tip producing work for less than 20 percent of the hours worked during the employee’s workweek. Therefore, an employer cannot take a tip credit for any of the time that exceeds 20 percent of the workweek. Time for which an employer does not take a tip credit is excluded in calculating the 20 percent tolerance.
- A tipped employee performs directly supporting work for not more than 30 minutes. Therefore, an employer cannot take a tip credit for any of the time that exceeds 30 minutes.
The final rule becomes effective December 28, 2021.
The publication of this rule will enhance the division’s ability to ensure that these essential workers are afforded every protection they are due. Many tipped employees remained on the job throughout the pandemic at risk to themselves and their families. Their hard work sustained their communities and helped businesses remain viable. They deserve our respect and diligence.
Be Audit-Secure™
