New York Employers Feel No Relief From Federal Ruling on Tipped Workers

The U.S. Department of Labor on Friday issued an update bulletin that rescinded prior guidance known as the “80/20 rule.” However, this won’t apply to New York employers because state labor laws are still in effect and still have enacted the 80/20 rule. New York’s hospitality wage order has an 80/20 rule that is even stricter than former federal Labor Department standard, forbidding employers from using the tip credit for an entire shift if a worker performs non-tipped tasks more than 20 percent of the time.

On the federal level and in some states, there is no longer a specific ratio for tipped employees who spent a portion of their working hours on non-tipped duties — like setting tables, rolling silverware or prepping salads. It is now clear that tipped workers can be paid the subminimum wage for that time if performed contemporaneously with direct customer-service duties or for a reasonable time immediately before or after performing such direct-service duties. The handbook update said Department of Labor’s Wage and Hour Division “will no longer prohibit an employer from taking a tip credit based on the amount of time an employee spends performing duties related to a tip-producing occupation.”

 

While states have different laws on labor and wage issues, so do large cities like New York City. This can make it complicated for businesses with multiple locations that may be subject to varying rules.

Employers who are unsure of applicable labor laws to their business can benefit from professional guidance from trade groups, labor department bulletins and employment lawyers. This should be reviewed on an annual basis as well. Politicians change the rules often and each new administration brings new interpretations and policies to their enforcement agenda.

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