The Department of Labor (“DOL”) announced publication of the Dual Jobs final rule. This rule finalizes the DOL’s proposal to withdraw one portion of the Fair Labor Standards Act (“FLSA”) tip rule that was finalized in 2020. Employers who employ workers engaged in tipped work, like servers and bartenders, need to consider how this rule impacts their operations and tipped employee pay.

Specifically, the DOL amended its regulations to clarify that an employer may only take a tip credit when its tipped employees perform work that is part of the employee’s tipped occupation. Work that is part of the tipped occupation includes work that produces tips (e.g., a nail technician performing a manicure), as well as work that directly supports tip-producing work (e.g., a nail technician cleaning manicure tools, or the salon), provided the directly supporting work is not performed for a substantial amount of time. This differs from the previous iteration of the rule which allowed an employer to take a tip credit for the time an employee performed related, non-tipped duties as long as those duties were performed contemporaneously with, or for a reasonable time immediately before or after, tipped duties.

The final rule, found here, will go into effect on December 28, 2021. Now is the time for employers to review their practices and prepare for compliance. Ballard Spahr’s Labor & Employment Group is prepared to help restaurants, hotels and other establishments whose employees rely on tips navigate federal regulation as well as similar issues under corresponding state laws.