Earlier this month, the Department of Labor issued an opinion letter ending the “80/20 rule” for whether employers could take a tip credit on employees who performed both tipped and non-tipped work. (FLSA2018-27.) The rule prohibited employers from taking a tip credit on the minimum wage if the employee’s non-tipped work consumed more than 20 percent of the employee’s work. In the opinion letter, the DOL stated that it would 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 [Fair Labor Standards] Act are met.”
On September 21, 2017, a federal district judge rejected a $19.1 Million proposed deal to end a nationwide wage-hour class action against the TGI Friday’s restaurant chain. In Zorrilla v. Carlson Restaurants Inc., 14-cv-2740 (SDNY), a class of nearly 29,000 tipped workers in nine states alleged violations of the FLSA and state wage-hour laws, including that the restaurant improperly took a tip credit, required an unlawful tip pool, and failed to pay spread-of-hours and uniform-related expenses. After more than four years of litigation, the parties reached perhaps the largest wage-hour settlement for the restaurant industry and sought court approval as required under the FLSA.