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Restaurant Operators Rally Against Biden Administration's Tip Credit Policy
The DOL's newly reinstated policy, named the 80/20 rule, is meant to provide greater tipping benefits to employees, but operators are expressing their concern.
The National Restaurant Association's Restaurant Law Center and the Texas Restaurant Association have filed a lawsuit against the Department of Labor over its revisions to the Fair Labor Standards Act tip regulations, which are set to take effect Dec. 28.
Those revisions include the DOL's resurrected 80/20 rule, which is designed to provide increased tipping benefits for workers in "dual job" situations, where tipped employees perform both work that produces tips as well as work that directly supports their tip-producing work. The rule aims to redefine what work is considered to be in support of an employee's tipped occupation, stating that it must be performed for more than 20% of the employee's hours worked during the workweek or a continuous period of time exceeding 30 minutes.
The plaintiffs of the recent lawsuit claim that the new regulation acts in conflict with the Fair Labor Standards Act and will "severely impact small and local restaurant owners' ability to operate their businesses." The Biden administration has been instituting several new rules that are meant to create additional earning opportunities for tipped employees, but this lawsuit claims that those opportunities come at a cost for operators struggling with labor shortages and supply chain crises.
On the other hand, the potential impact on wages through an 80/20 revision could provide a much-needed boost to employee retention in the restaurant industry. The Bureau of Labor Statistics November job report found that the restaurant industry is down more than 750,000 jobs since the onset of the COVID-19 pandemic and, according to a One Fair Wage report, nearly 80% of restaurant workers say they want to leave their jobs because of low wages and tips.
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