FLSA Compliance Shifts in Tip Retention, Overtime Exemption

Wage-and-hour changes come from each government branch

Between the end of March and the beginning of April, all three branches of government generated significant developments in wage-and-hour compliance. A new amendment to the Fair Labor Standards Act, a major Supreme Court decision and a pilot program from the Labor Department could give employers plenty of reasons to review their worker classification practices under federal law.

Couched in the new 2,232-page spending bill are two-and-a-half pages that contain a major wage-and-hour law change for the hospitality industry.

The omnibus spending bill that President Donald Trump signed March 23 drew attention over immigration issues. But the bill also included an amendment to the FLSA that bans employers from retaining any tips their employees earn. The amendment would seem to settle an ongoing tip- retention issue in the courts and at the DOL, but employer-side attorneys say it might give rise to more compliance confusion among companies with tipped workers.

Under what’s become known as the FLSA’s tip-credit provision, employers can pay tipped employees a lower minimum wage of $2.13 an hour provided those employees still earn enough in tips to clear the federal minimum wage. Some restaurants and hospitality employers forgo the tip credit and pay tipped workers at least minimum wage, and the issue has been whether that gives them the right to retain the tips those workers earn.

To read this story and other complete articles featured in the April 9, 2017 print edition of Law Week Colorado, copies are available for purchase online.