This article was sourced from hrdive.com

With about a month remaining before Inauguration Day, another Biden-era DOL regulation has met its end. The agency continues to fight legal battles in support of other blocked regulations, such as its overtime rule, which was struck down by a federal judge in a decision that DOL has since appealed to the 5th Circuit.

Business groups opposed both the overtime and tip credit final rules. The tip credit rule sought to update FLSA regulations that determine whether employers may take a tip credit toward their obligations to dual job workers.

Specifically, the rule stated that work which directly supports tip-producing work may only be considered part of an employee’s tipped occupation if that work is not performed for a “substantial amount of time.” Substantial is defined as either exceeding 20% of the worker’s hours during the workweek or performed for a continuous period exceeding 30 minutes.

DOL’s proposed framework is commonly known as the “80/20” guidance and has a long history dating back through several presidential administrations. The Biden-era DOL’s rule was itself an attempt to replace a 2020 tip rule implemented during President-elect Donald Trump’s first administration.

The 2020 rule said employers could take a tip credit for the time a tipped employee spent performing related, non-tipped duties, as long as those duties were performed contemporaneously with, or for a reasonable time immediately before or after, tipped duties. Employers also could take a tip credit for an employee’s work if the employee’s tasks were on DOL’s O*NET task list for that tipped job, according to the 2020 rule.

This information is not meant to be legal advice and is for consultative purposes only. Please contact Valerie Bruce Hovland, Salus Group’s V.P. of Compliance at [email protected] if you need additional information.