DOL Changes Could be Positive for Hospitality Employers

March 2018As Published in: Hospitality LawAttorney: Jason R. Finkelstein
Changes are underway at the U.S. Department of Labor — changes that could be positive for employers. Toward the end of 2017, the DOL announced its semi-annual regulatory agenda, out¬lining plans to repeal the 2011 tip pooling regulation that has given many restaurants headaches and led to some high-profile restaurateurs to forgo tipping in their restaurants altogether.

The 2011 rule — which prohibits restaurants and bars from forcing servers to share their tips with untipped employees and deems that tips are the property of employees — was potentially up for review at the Supreme Court due to a peti¬tion from the National Restaurant Association. Now that looks largely unnecessary.

Jason Finkelstein, a New York City based attorney who is a member of Cole Schotz, P.C.'s Restaurant & Hospitality Practice Group says he expects restaurateurs to be happy with this DOL change.

"This helps them significantly," he says. "Restaurateurs can go back to what they were doing previously and splitting tips more broadly."

Although some argue that employees may suffer harm from this approach, Finkelstein says he believes bringing back the team approach in dining will actually help morale. Unfortunately, he cautioned, this change may not benefit restau¬rants in municipalities such as New York City that have their own strict rules on tip sharing.

While the DOL is still accepting comments on this proposed change — and hasn't been enforcing the 2011 tip pool rules since last sum¬mer — it's likely that the official repeal will go through in the next few months. Finkelstein suggests that hospitality employers make sure their policies are up to date and know their state and local rules before changing tipping arrangements.

Another DOL change may allow employers to bring back unpaid interns. On Dec. 19, 2017, the U.S. Court of Appeals for the Ninth Circuit became the fourth federal appellate court to expressly reject the DOL’s six-part test for determining whether interns and students are employees under the FLSA — a test that was instituted during the Obama Administration.

The DOL clarified that going forward, it will use the same “primary beneficiary” test that the courts have used to determine whether interns are employees under the FLSA. The DOL also noted that it has directed the Wage and Hour Division to update its enforcement policies to align with recent case law, eliminate unnecessary confusion among the regulated community, and provide the division's investigators with increased flexibility to holistically analyze internships on a case-by-case basis.

Reprinted with permission from Hospitality Law. Copyright 2018 by LRP
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