The U.S. Department of Labor (DOL) announced a final rule to withdraw one portion of the 2020 final tip rule under the Fair Labor Standards Act (FLSA) and finalize its proposed revisions related to the determination of when a tipped employee is employed in dual jobs [86 F.R. 60114, 10-29-21]. The final rule goes into effect on December 28, 2021.
The final rule creates a functional test to measure whether a tipped employee is engaged in their tipped occupation and uses examples to explain the application of that functional test.
Specifically, the DOL is amending its regulations to clarify that an employer may only take a tip credit when tipped employees perform work that is part of the employee’s tipped occupation. Work that is part of the tipped occupation includes work that produces tips as well as work that directly supports tip-producing work, provided it is not performed for a substantial amount of time.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for the APA.