THE BASICS:

As of December 28, 2021, the U.S. Department of Labor’s Dual Jobs final rule is now in effect.

This rule which was first proposed during the Obama presidency and revoked during the Trump administration is back under the Biden administration.

Under the final rule, an employer can take a tip credit only when the worker is performing tip-producing work.

Historically, the “tip credit” has been the difference between the minimum wage (currently $9.87) and what you actually pay a tipped employee out of pocket (currently a minimum of $3.75 per hour).  That difference or “tip credit” is made up of tips reported by the server.

WHAT CHANGED:

This allows restaurants to pay tipped servicers far less than the normal minimum wage.

Under the new rule, operators can no longer take a tip credit for the time employees spend on tasks considered “directly supporting work” that exceeds 20% of the workweek or 30 continuous minutes.

THE EFFECT ON RESTAURANT OWNERS:

This means, practically speaking, that you have to be careful that servers do not spend more than 30 minutes in set up, cleaning, prep work or other non-tipped duties or you would owe them the entire minimum wage for any time over the 30 minutes that is non-tipped.   In other words, if a tipped employee does set up for 25 minutes per day, you can still pay the tipped minimum for those 25 minutes.  If a tipped employee does set up for 35 minutes, you would owe the full minimum wage for the 5 minutes that person worked in non-tip activities (over the 30-minute limit)

You also have to be careful that a server does not spend more than 20 percent of his or her time in non-tipped activity.  If you go over the 20 percent of hours worked during the workweek, then you cannot take the tip credit for the non-tipped activity exceeding the 20 percent.

Editorial comment:  Do these bureaucrats have nothing better to do?