Should Servers Be Paid $2.13 or $7.25 Per Hour? It Depends…
As a tipped employee, are you compensated fairly for the work that you have to perform that does not involve waiting tables? According to the Department of Labor’s recently issued final rule respecting the Fair Labor Standards Act’s Tip Regulations[1], employers are required to pay you a full minimum wage for such work under many circumstances.
Anyone who has ever worked as a server at a restaurant knows that the job involves more than just waiting tables. Before you clock out of your shift, many times prior to beginning a morning shift, and all throughout, you must likely complete what is known as your “sidework”, a term that few restaurant workers regard fondly. Sidework refers to an often long, time consuming and complicated set of tasks that in some instances have nothing to do with serving tables, but that are necessary to keep the restaurant running—things like restocking to-go supplies, cleaning dining areas, cutting fruit, or breaking down food service areas at the closing of the restaurant, just to name a few things. Most restaurants do not pay their employees a minimum wage for time spent performing these and other tasks, but should they? In short, it depends.
One longstanding exception to the Fair Labor Standards Act’s federally mandated requirement that employers pay their employees a minimum wage of $7.25 per hour is known as a the “tip credit rule,”[2] which allows employers to count its “tipped employees”[3] tips towards its minimum wage obligation up to a total of $5.12 per hour.[4] [5]
But what if a tipped employee’s job duties are such that they are actually performing other tasks additional to those for which he receives tips? Enter the DOL’s “dual jobs” regulation.[6] According to that provision, an employee may have other job duties that are different enough from their customer service duties that the employer may not claim the tip credit for performing those duties, or may only do so up to a certain point, depending on the nature of the duties.[7]
But what kinds of work must an employer always pay a full minimum wage for? And when does an employer have to pay a full minimum wage for duties that are related to tip-producing work, like sidework? The Department of Labor sought to answer those questions through release of a final rule on the matter on October 28, 2021 that became effective in late December 2021. The Dual Jobs final rule is a two-part test that states that an employer may only utilize the tip credit for hours in which the employee (a) “produces tips” or (b) “directly supports tip producing work, provided the directly supporting work is not performed for a substantial amount of time.”
What Kinds of Work “Produces Tips?”
In the Dual Jobs final rule, the DOL defined “tip-producing work” as “any work performed by a tipped employee that provides services to customers for which the tipped employee receives tips.” That definition is intended to encompass “all aspects of the service to customers for which the tipped employee receives tips,” which naturally includes things like “serving food and drink…filling water glasses for their table, verifying whether a customer has food allergies, or cleaning a spill on their customer’s table,” but also reaches tasks more peripheral to the customer service experience, like “”[w]alking to the kitchen or bar to retrieve prepared food and drink and delivering those items to the customers,” or “talking to the customer seated at the bar and ensuring that a patron’s favorite game is shown on the bar television,” or “bringing a highchair and coloring book for an infant seated at their table,” for example.
The final rule also clarified that a tipped employee’s “down time,” such as when the employee “has started their shift and is waiting for a customer service to commence,” or is otherwise “not proving service to customers for which the tipped employee receives tips,” is not part of an employee’s tip-producing work.[8]
What Kinds of Work “Directly Supports” Tip Producing Work?
Per the final rule, “’[d]irectly supporting work’ is either performed in preparation of or otherwise assists such tip-producing customer service work.”
The DOL provided examples of directly supporting work, which included “rolling silverware, setting tables, and stocking the busser station.” These tasks may be performed before or after table service” and are “done in preparation of the tip-producing customer service work.”
The DOL also provided examples of work that is not related to customer service and so would not be considered part of a server’s tipped occupation, which included “preparing food, including salads, and cleaning the kitchen and bathrooms.”
Finally, it is important to recall that no matter the nature of an employee’s directly supporting work, it may not be considered part of their tipped occupation if it amounts to a “substantial amount of time,” as discussed below.
What Is a “Substantial Amount of Time” Spent Performing Directly Supporting Work?
Where a tipped employee’s directly supporting work accounts for “more than 20% of their workweek…the employer cannot take a tip credit” for that time. That means that if a tipped employee spends more than 20% of their time in a workweek performing directly supporting work, they must be paid a minimum wage for all of that time.
Additionally, if a tipped employee performs more than 30 consecutive minutes of nontipped, directly supporting work, the employer may not take tip credit for that time. The DOL provides the following example: “If a tipped employee is required to perform directly supporting work continuously for two hours after the establishment is closed to customers, the employer may take a tip credit for the first 30 minutes but must pay the full Federal minimum wage for the remaining hour and a half.”
The Bottom Line
If you are a tipped employee, your employer is permitted to pay you below minimum wage, but only for hours that you are engaged in performing tipped work. If, for example, you are a server that performs other tasks unrelated to your provision of service to customers, like cleaning bathrooms or preparing food for service, you should be paid a full minimum wage for that time.
Furthermore, if you spend more than 20% of your week performing tasks that do not produce tips (like taking orders, running food refilling waters, running cards, etc.) but that “directly support” producing tips (think sidework, like refilling sauces, rolling silverware, sweeping, etc.) then you should be paid a full minimum wage for that time. You should also be paid a full minimum wage for any occasion where you perform these directly supporting tasks for more than 30 consecutive minutes.
These regulations apply to any employee who normally makes more than $30 per month in tips, not just servers.
Because the law surrounding an employer’s wage obligations is often confusing, many tipped employees simply give their employers the benefit of the doubt that they are being compensated fairly. In turn many employers either do not understand the law themselves or purposefully eschew their payment obligations by improperly taking tip credits. While every case is different, if you believe that your employer has failed to pay you a full minimum wage in any of the situations above, you may have a claim under the FLSA.
[2] 29 U.S.C. § 203(m)(2)(A)
[3] A “tipped employee” is one who “customarily and regularly receives more than $30 a month in tips. 29 U.S.C. § 203(t); see also 29 C.F.R. § 531.56.
[4] 29 C.F.R. § 531.59
[5] Put differently, an employer may pay a tipped employee only $2.13/hour, provided that with their tips, they make at least $7.25/hour, the federal minimum wage. The employer must pay the difference if the tipped employee’s total income does not amount to $7.25/hour.
[6] 29 C.F.R. § 531.56(e)
[7] Id.
[8] 86 FR 60114 at 17.