On December 22, 2020, the U.S. Department of Labor (DOL) issued
a final rule solidifying tip credit issues under
the Fair Labor Standards Act (FLSA). The rule becomes effective 60
days after its publication in the Federal
Register.1
The rule addresses two key areas. First, it incorporates
legislative changes to the FLSA related to tip ownership, even when
employers do not apply a tip credit toward employees' wages.
Second, it adopts the DOL's 2018 opinion letter that clarified
the scope of the dual jobs regulation and eliminated the so-called
80/20 Rule.
Tip Ownership
In the Consolidated Appropriations Act (CAA) of 2018, Congress
amended the FLSA to provide that "[a]n employer may not keep
tips received by its employees for any purposes, including allowing
managers or supervisors to keep any portion of employees' tips,
regardless of whether or not the employer takes a tip credit."
It also permitted employers that did not take the tip credit to
require employees
