BACKGROUND

Federal law allows employers to pay employees in tipped jobs just $2.13 an hour, with the expectation that tipped employees will receive the bulk of their wage from tips. But it does not allow employers to pay this wage for lengthy amounts of non-tipped “side work.” The DOL rule provides clear guidelines to ensure that unscrupulous employers cannot pay subminimum wages when they require workers to spend much of their shifts on work for which they do not earn tips.

In December 2021, the Restaurant Law Center and the Texas Restaurant Association sued in the Western District of Texas to block the Department of Labor’s final rule and reverse these wage protections. The district court denied the motion to block these protections. RLC and TRA appealed to the Fifth Circuit.

DOL’s final rule, based on long-standing guidance from the Reagan administration, limits the amount of time tipped employees can spend performing non-tip-producing work while still receiving cash wages as low as $2.13 per hour. The DOL rule recognizes that tipped employees can engage in three types of work: tipped work, untipped work, and work that supports tipped work (but does not itself lead to tips). The rule limits tip-supporting work to 20 percent of a tipped employee’s time, or a maximum of 30 consecutive minutes, prohibiting employers from taking advantage of workers through excessive amounts of non-tip-generating work and, as a result, reducing wage theft.

On July 15, 2022, on behalf of the Restaurant Opportunities Centers United, Economic Policy Institute, National Women’s Law Center, Main Street Alliance, and American Sustainable Business Network, Democracy Forward filed its first brief urging the Fifth Circuit Court of Appeals to uphold a district court’s decision to allow a Department of Labor rule protecting minimum wage restaurant workers to remain in effect. DOL’s final rule protects minimum-wage restaurant workers from wage abuse and ensures full wages for restaurant workers.

There are over 11 million restaurant workers in the United States, and these workers are more than twice as likely to live in poverty as the general workforce. Continuing a larger nationwide trend of attacks on workers’ rights by state officials, Attorneys General from UT, SC, OK, MT, MS, LA, AR, AL, and TX sided with special interests in their effort to reverse these critical protections for minimum-wage restaurant workers.

The amicus brief explains that the administrative record in the case shows that the Department of Labor acted reasonably in adopting the final rules. The Department had an ample record showing the importance of a clear rule for protecting workers and providing guidance to employers, and it even incorporated a number of industry comments into its final rule.