DOL Delays Overtime and Tip Credit Rules, Plans Joint Employment Rule
Author: Michael Cardman, XpertHR Legal Editor
October 17, 2018
The latest regulatory agenda from US Department of Labor (DOL) outlines the agency's plans for rulemaking that will affect employers across the nation. Among the most notable developments are:
- Delays in the target dates for Fair Labor Standards Act (FLSA) rules concerning overtime and the tip credit; and
- The first formal announcement of plans for rules to clarify joint employment under the FLSA.
Overtime Rule Delayed Until March
The DOL originally planned to issue a new rule to set the minimum salary level for most overtime-exempt employees by October 2018. In the new agenda, the target date is now moved back to March 2019.
Labor Secretary Alexander Acosta has said the minimum salary level should be "somewhere around $33,000" to account for the rate of inflation since 2004.
Tip Credit Regulations Expected Soon
Last year, the DOL had planned to rescind a 2011 Obama administration regulation providing that tips are the property of the employee, regardless of whether or not the employer has claimed a minimum wage tip credit.
But before the DOL could do so, Congress amended the FLSA to prohibit employers, including managers or supervisors, from keeping any part of tips received by employees for any purpose, regardless of whether the employer takes a tip credit.
The amendment also repealed DOL regulations that prevented employers from requiring employees who traditionally receive tips, such as restaurant servers, to share their tips with employees who usually do not receive tips, such as cooks and dishwashers. Consequently, an employer may now require tipped employees to share tips with non-tipped employees, as long as the employer does not take a tip credit.
The DOL had planned a new rule to align its regulations with this recent statutory amendment by August 2018; but the target was pushed back to October 2018.
Joint Employment Rule Planned for December
Another noteworthy development is that the DOL plans to issue a new rule to "clarify the contours of the joint employment relationship" under the FLSA.
Employers have struggled with ambiguous and often-conflicting standards for what constitutes joint employment under different laws and in different real-life contexts.
Most of the current rules defining joint employment under the FLSA were put forward 60 years ago, and the DOL said they do not reflect changes in the 21st century workplace. The DOL intends to establish "more uniform standards" it hopes will provide clarity to the regulated community and thereby enhance compliance.
Meanwhile, the National Labor Relations Board (NLRB) proposed a new rule earlier this year to redefine the standards for determining whether two or more employers are joint employers under federal labor law.