US Department of Labor’s final rule sets limits on amount of non-tipped work tipped employees can do when tip credit applied, defines tipped work
WASHINGTON – The U.S. Department of Labor today announced a final rule that sets reasonable limits on the amount of time tipped employees can spend in non-tipped activities when the employer receives a tip credit. The rule clarifies that an employer may only take a tip credit for the hours when an employee is doing work that is tip-producing or engaged in tasks that directly support tip producing work.
The final rule also amends the regulations in Executive Order 13658, which address the hourly minimum wage paid to employees performing work on or in connection with covered federal contracts, consistent with the amendments to the dual jobs regulations.
Under the final rule, an employer can take a tip credit only when the tipped employee is performing tip-producing work or when the tipped employee is performing work that directly supports tip-producing work as long as the tipped worker does not spend a substantial amount of time doing tip-supporting work. The rule defines substantial amount of time as more than 20 percent of the hours worked during the employee’s workweek or a continuous period of time that exceeds 30 minutes.
The final rule becomes effective Dec. 28, 2021.
The rule’s publication will enhance the division’s ability to ensure these essential workers benefit from every protection the law affords them. Many tipped employees remained on the job throughout the pandemic at risk to themselves and their families.
“Women, people of color and immigrants represent more than half of all tipped workers. Today’s final rule enhances protections for this vital segment of the nation’s essential workforce, and combats income disparity and promotes equity,” said Wage and Hour Division Acting Administrator Jessica Looman.
For more information on protections for tipped workers and others under the FLSA, or learn more about the Wage and Hour Division. You may also call toll-free 1-866-4US-WAGE to speak directly and confidentially to a trained Wage and Hour Division professional. The division protects workers regardless of immigration status, and can communicate with workers in more than 200 languages.