Dual jobs for tipped employees/subminimum wage explained
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Monday, February 25, 2019

Dual jobs for tipped employees/subminimum wage explained

By Payroll and Entitlements Editorial Staff

On February 15, the Department of Labor released several Fair Labor Standards Act guidance documents addressing "dual jobs" for tipped employees and the subminimum wage that may be paid under Section 14(c). The guidance clarifies when a tip credit may be taken for tipped employees who also perform non-tipped duties, as well as certain aspects of the subminimum wage for workers with disabilities.

“Dual job” tipped employees. The department has changed its Field Operations Handbook to update FOH 30d00(f), which contains the Wage and Hour Division’s (WHD) interpretation concerning whether tipped employees are working "dual jobs."

As new Field Assistance Bulletin (FAB) No. 2019-2 explains, consistent with Opinion Letter FLSA2018-27, issued November 8, 2018, the WHD will no longer prohibit an employer from taking a tip credit based on the amount of time an employee spends performing duties related to a tip-producing occupation that are performed contemporaneously with direct customer-service duties or for a reasonable time immediately before or after performing such direct-service duties.

The WHD said that its staff will consult the Occupational Information Network (O*NET) and 29 CFR 531.56(e) to determine whether duties are related or unrelated to the tip-producing occupation. Duties will be considered related to the tipped occupation when listed as "core" or "supplemental" under the "Tasks" section of the "Details" tab for the appropriate tip-producing occupation in O*NET.

Wait staff. The FOH specifically cites the core tasks listed for waiters and waitresses in O*NET, which include: "cleaning tables or counters after patrons have finished dining; preparing tables for meals, which encompasses setting up items such as linens, silverware, and glassware; and stocking service areas with supplies such as coffee, food, tableware, and linens. In addition, O*NET lists garnishing and decorating dishes in preparation for serving as a supplemental task for waiters and waitresses." Thus, under the revised 30d00(f), employers are permitted to take a tip credit for any amount of time tipped wait staff spends performing these "related duties."

Employee property. However, employers remain prohibited from keeping tips received by their employees, regardless of whether the employer takes a tip credit under the FLSA. Employers that elect to use the tip credit provision must ensure tipped employees receive at least the federal minimum wage when direct (or cash) wages and the tip credit amount are combined. If an employee’s tips combined with the employee’s direct (or cash) wages do not equal the minimum hourly wage, the employer must continue to make up the difference.

Subminimum wage. The DOL also issued three guidance documents related to the impact of Rehabilitation Act section 511 and the administration of FLSA Section 14(c), which authorizes employers, after receiving a certificate from WHD, to pay subminimum wages—wages less than the federal minimum wage, but commensurate with individual productivity—to workers who have disabilities for the work being performed:

  • FAB No. 2019-1 concerns the definition of subminimum wages under Section 511 and WHD’s enforcement of limitations on the payment of those wages under Section 14(c).
  • Revised Fact Sheet #39H, The Workforce Innovation and Opportunity Act and Limitations on Payment of Subminimum Wages under Section 14(c) of the Fair Labor Standards Act, includes new information on the definition of subminimum wages and timing requirements under Section 511, as well as two charts to provide visual summaries for determining when and to whom the specific Section 511 requirements apply. The fact sheet also cross-references readers to the related regulations issued by the U.S. Department of Education.
  • Fact Sheet #39I, Adjusting Commensurate Wage Rates under a Section 14(c) Certificate After a Change in the Minimum Wage, provides guidance on taking appropriate action to ensure prevailing wage rates are timely examined and adjusted, and the workers’ commensurate wage rates correspondingly adjusted, as needed, when there is an increase in the federal, state, or a locality’s minimum wage requirements.

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