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U.S. Labor Department Issues Guidance on Sub-Minimum Wage Requirements for Tipped Employees

    Client Alerts
  • March 14, 2019

Last year, the Department of Labor’s Wage and Hour Division clarified its position regarding work by tipped employees that allows the employer to claim the employee’s tips in order to constitute the full federal minimum wage. DOL said the fact that employees perform some non-tipped functions as part of their job duties does not mean that the employer has to separately account for this time, paying different wage rates depending on whether the work is tipped. The employer must only account for this difference if the employee is working “dual jobs.”

In new guidance, DOL says work that substantially relates to the core functions of tipped work will not be considered a dual job. For wait staff, examples include cleaning tables or counters, preparing tables for meals, and stocking service areas. A dual job determination requires reference to the Occupational Information Network database in order to determine if the additional functions are completely outside the core or supplemental job description for the tipped work.

DOL closed the guidance by reminding employers that in order to claim the tip credit, they must follow DOL rules regarding prohibited tip sharing arrangements, making sure that tipped employees actually receive their gratuities.