The United States Department of Labor (USDOL) issued four opinion letters today in which it
construed issues arising under the federal Fair Labor Standards Act
("FLSA"). The most significant of these letters, FLSA2018-27, is one that addresses the Section
3(m) tip credit which employers may take for certain types of
employees under certain circumstances. FLSA2018-27 is an important
development that appears to signal the impending demise of the
much-maligned, and legally-suspect, "20% Rule" that has
caused problems for many employers of tipped employees,
particularly in the restaurant industry.
The letter begins by providing an overview of the circumstances
allowing for proper application of the "tip credit." For
example, the letter examines the "Dual Jobs" regulation
– 29 C.F.R. § 531.56 - which recognizes that in some
situations, an employee works for an employer in two distinct jobs,
i.e. as a server and a maintenance worker, and states that the tip
credit may only
