Revived DOL Guidance Makes it Easier for SMB Owners to Claim Tip Credit

DOL confirmed in a recent letter there is no limit on the amount of duties for workers for them to claim tip credit. Everything you need to know is here.

Updated on April 4th, 2019

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Earlier this month the U.S. Department of Labor (DOL) clarified in an opinion letter it will no longer limit the number of duties an employer may assign to a tipped worker to still qualify for tip credit, as long as the duties are job-related. Experts predict it may limit litigation in this area, which there has been "a lot of".

The Trump administration reinstated the opinion letter as an official statement of DOL policy. By law businesses use tip credit by paying tipped workers from $2.13 an hour if those workers earn at least the standard minimum wage of $7.25 an hour once their tips are added in.

A 2007 federal district court decision prohibited employers from taking the tip credit for duties related to the tipped job if these functions exceeded 20 percent of the employee's work time. This was rejected by U.S. DOL in their latest opinion letter on the matter.

Other Points Clarified by DOL in the Latest Opinion Letter:

  • Guaranteed weekly salaries for professional employees won't jeopardize the professional exemption from overtime requirements, which was clarified in an earlier opinion letter.
  • A company that operates and maintains swimming pool facilities may be exempt from minimum-wage and overtime requirements, which was clarified in an earlier opinion letter.
  • Nonprofit, private volunteer fire departments that contract with state municipalities to provide fire protection aren't entitled to a special overtime exemption for fire and police departments, which was clarified in an earlier opinion letter.

Related to Tipped Occupation: Can Count Towards Tip Credit

Unrelated to Tipped Occupation: Can't Count Towards Tip Credit

Duties listed as core or supplemental for a tipped job in the tasks section of details report in the Occupational Information Network (O*NET) www.onetonline.org.

Duties not listed as core or supplemental for a tipped job in the tasks section of the details report in the Occupational Information Network (O*NET) www.onetonline.org.

Examples: Waiters cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes.

Examples: Maintenance work, such as when a maintenance employee or cook in a hotel serves as a waiter as well.

Tip Credit Changes in Recent Years:

Year Changes

Decision on Tip Credit

2009

No limit on the number of duties assigned.

2011

Withdrew above decision.

2018

No limit on the number of duties assigned.

Further Reading:

Read a full report on U.S. DOL's opinion letter on tipping credit here.