October 20, 2019

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Restaurant Employers Take Note: DOL Proposes New FLSA Tip Regulations

In the months since the Supreme Court of the United States upheld Auer deference, courts around the country have consistently declined to afford deference to the U.S. Department of Labor’s November 2018 opinion letter which undercut the so-called “80/20” rule. Today, likely in response to the lack of traction its sub-regulatory guidance had gained with courts, the DOL issued proposed rules concerning tipped workers.

The DOL’s proposed rules would elevate the guidance of its November 2018 opinion letter. For those employers who do not take a tip credit, the DOL also expanded the universe of those who are eligible to participate in mandatory tip pools.

Among other things, the DOL’s notice of proposed rulemaking proposes: 

  • Explaining that an employer may take a tip credit for any amount of time that a tipped employee performs related non-tipped duties contemporaneously with his or her tipped work, or for a reasonable time immediately before or after performing the tipped duties.

  • Removing regulatory language restricting an employer’s use of tips when the employer does not take a tip credit, allowing such employers to include back of house workers in a mandatory tip pool. 

While these proposed rules are not final, each would represent a welcome development for restaurant employers. The plaintiffs’ bar has long pursued class and collective action lawsuits alleging one or a combination of 80/20 and improper tip pool claims. Should these proposed rules go into effect, restaurant employers will have a significant new defense to fight back against such claims. 

Given the prevalence of 80/20 claims in the service industry, restaurant employers would be well served by taking note of this new proposed rulemaking and its potential as a potent defense against class and collective litigation.

The DOL’s proposed rules will be published on October 8, 2019, and will be available for review and comment for 60 days.

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Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment
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Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...

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Mark Wallin, Attorney, BT, Chicago, Labor Employment
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In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of employment matters including wage and hour class and collective actions, as well as complex, multi-plaintiff and single plaintiff employment discrimination claims brought not only by private plaintiffs but also initiated by the Equal Employment Opportunity Commission (EEOC).

Mark has successfully represented companies of virtually all sizes, litigating matters across multiple areas of the law, from the pleading stage through appeal. He has also represented clients in arbitrations and before administrative bodies.

Mark vigilantly stays abreast of cases, laws, and trends that may impact his clients coming out of the courts, Congress and the state legislature, as well as the U.S. Department of Labor, the EEOC, and state regulatory agencies. He strives to keep a watchful eye on how labor and employment related laws are evolving so as to proactively advise clients.

In addition to his regular legal practice, Mark has undertaken several pro bono cases including trying criminal jury trials in state and federal court, and representing indigent plaintiffs in civil rights matters as part of the federal Trial Bar.

Mark began honing his litigation skill during law school when he interned at the U.S. Attorney’s office for the Northern District of Illinois, where he handled both civil and criminal issues. He also interned for a judge on the U.S. Court of Appeals for the Seventh Circuit, which gave him a unique vantage of seeing the issues from the court’s perspective.

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