Federal Court “Tips” The Scales in Favor of Restaurant Workers

Back in November, the U.S. Department of Labor rescinded the controversial Obama-era 80/20 Rule, dictating how restaurants paid tipped workers, barring employers from taking tip credit from workers who spend more than 20 percent of their time doing non-tipped work. Now, Orange County fair wage attorneys understand a federal judge for the U.S. District Court for the Western District of Missouri rejected the DOL’s guidance, finding it “unpersuasive and unworthy.”restaurant worker tips

The judge further stated that the Labor Department’s issuance of an opinion letter abruptly shifting gears on this issue after 10 years of consistently construing such regulation as limited by the 80/20 rule wouldn’t persuade the court to apply a new interpretation of litigation. Noting the DOL gave zero reasoning or evidence of any in-depth consideration for reversing its position, and it doesn’t stand up to the standard set by the U.S. Supreme Court, and characterized the November rule change as a “sudden surprise” and an “unjustified departure” from the agency’s previous guidance.

Per the Fair Labor Standards Act, 29 USC s. 201, employers must pay workers at least $2.13 hourly for their wages, then take a tip credit in order to make up the difference between the worker’s wages and federal minimum wage. The 80/20 rule arose because tipped workers were spending an extensive amount of time carrying out non-tip-generating duties, like rolling silverware or setting tables. The updated guidance from the DOL was that the agency was no longer going to limit the amount of time workers could spend performing those duties.¬†

At least one federal judge rejects the agency’s reasoning (or rather, lack thereof).

Underlying Restaurant Worker Wage and Hour Lawsuit

As our Orange County fair labor lawyers understand from the complaint, plaintiff¬† sought (and received by the trial court) class action certification on behalf of all tipped workers employed with defendant wings-and-beer chain restaurants who were paid less than minimum wages over the course of three years, in violation of the Fair Labor Standards Act, 29 USC s. 201. According to the complaint, defendants violated this federal statute when paying both bartenders and servers less than minimum wage by failing to inform of them of the 80/20 rule tipcredit provisions and routinely requiring workers to carry out “improper and excessive” non-tipped work. Further, restaurant workers were required to reimburse their employers from their own tips when a customer walked out or when there were shortages in the cash register.

The federal court in Missouri certified the class conditionally (for notice purposes) before discovery was finished, finding plaintiff had a established sufficient grounds for her claim that members of the class were collectively victimized by the same policy, resulting in compensation that failed to satisfy the tip credit provisions of the FLSA’s minimum wage requirements.

Although restaurant employers may be disappointed by the rule (many had said it was impractical to enforce because it meant closely monitoring and classifying tipped worker duties), Orange County employment lawyers in California see it as a win for workers, who for too long have been exploited by restaurants seeking to avail themselves of cheap or free labor to which they were not entitled at the expense of their lowest-paid workers.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 949.375.4734.

Additional Resources:

Department of Labor Retracts Controversial 80/20 Rule, November 2018, By Rachel Taylor, FoodNewsFeed.com

More Blog Entries:

Airline Attendants Win $77M in California Wage and Hour Lawsuit, Jan. 26, 2019, Orange County Employment Lawyer Blog