New DOL Opinion Letter: Tipped Employees in Dual Jobs

Written by: Don Benson, Esq.

The U.S. Department of Labor issued a new Opinion Letters on November 8, 2018, which will be of interest to many employers with tipped employees.

History of Issue.

On 01/16/2009 the DOL issued an Opinion Letter which was withdrawn for further study on 03/02/09.  The DOL has now reissued that earlier Opinion Letter in its entirety as official Wage and Hour Division policy.

I. Tipped Employees in Different Roles.

In this Opinion Letter [FLSA2018-27], the DOL explains the Wage and Hour regulation at 29 C.F.R. § 531.56(e) interpreting the definition of a “tipped employee” in section 3(t) of the Fair Labor Standards Act, 29 U.S.C. § 203(t).  The tip credit provision in section 3(m) of the FLSA, 29 C.F.R. § 203(m), permits an employer to pay its tipped employees not less than $2.13 per hour in cash wages and take a “tip credit” equal to the difference between the cash wages paid and the federal minimum wage, $7.25 per hour.

A. Dual Jobs.

Recognizing that there are situations in which employees have more than one job for the same employer, some of which may meet the tip credit requirements and some of which may not, the Regulations provide that in such “dual jobs,” the tip credit may only be applied with respect to the time spent in the tipped job.

For example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $20 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man. 29 C.F.R. § 531.56.

B. Same Job but Related Duties: Tipped and Non-Tip Duties.

The regulations further recognize that some occupations require both tip-generating and non-tip-generating duties, but do not constitute a dual job that necessitates the allocation of the tip credit to the tipped occupation only.

Such a situation [i.e. one involving a dual job] is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable from the counterman who also prepares his own short orders or who, as part of a group of countermen, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

II. The Technical Answer: Consult O*NET

The dividing line between “dual job” and “related duties” is not always clear, however. The DOL does not place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties and all other requirements of the Act are met.

The determination that a particular duty is part of a tipped occupation should be made based on the following principles:

A. Duties listed as core or supplemental for the appropriate tip-producing occupation in the in the Tasks section of the Details report in the Occupational Information Network (O*NET) httpi/onetcenter.org or 29 C.F.R. § 531.56(e) shall be considered directly related to the tip-producing duties of that occupation.

B. Employers may not take a tip credit for time spent performing any tasks not contained in the O*NET task list. However the employer may still argue that some of the time spent by a tipped employee performing tasks that are not listed in O*NET may be subject to the de minimis rule contained in Wage and Hour’s general FLSA regulations at 29 C.F.R. § 785.47.