If there is any opinion U.S. employers care about, it’s the Department of Labor’s (DOL). A DOL opinion letter can serve as a partial defense for employers who rely on them in good faith. However, employers should be hesitant to trust that an opinion letter will offer much protection. These letters are subject to the political whims of the administration in power and are given little deference in court. By the time a matter is litigated, a new administration may be in office. For those reasons, the Trump Administration’s reprisal of an opinion letter rescinding the 80/20 rule should be met with cautious optimism.
DOL alternates between offering “Administrator’s Interpretations” under Democratic administrations and opinion letters under Republican administrations. They are two sides of the same coin. Administrator’s Interpretations are meant to provide the Department’s broadly applicable interpretation of one of its regulations. In contrast, opinion letters respond to a specific employer inquiring about the Department’s interpretation of a regulation based on the employers’ specific set of facts. Each opinion letter concludes with a major caveat:
This opinion is based exclusively on the facts and circumstances described in your request and is given based on your representation, express or implied, that you have provided a full and fair description of all the facts and circumstances that would be pertinent to our consideration of the question presented. Existence of any other factual or historical background not contained in your letter might require a conclusion different from the one expressed herein.
In addition to this significant qualification, the utility of the letters to the inquiring employer is questionable. Often by the time an opinion letter is issued, the employer has already taken whatever action it believes is most defensible. That is, if the employer ever even receives the letter. In the final days of the Bush Administration, the former Wage and Hour Division Acting Administrator, and the subsequent Team Leader, hastily signed 17 opinion letters. Those letters were never mailed to the inquiring employers and were promptly withdrawn under the Obama Administration. As expected, the Trump Administration reissued those 17 previously withdrawn opinion letters and withdrew a handful of the Administrator’s Interpretations. None of this should instill much confidence in the reliability of these letters.
Moreover, the U.S. Supreme Court does not give much weight to opinion letters nor Administrator’s Interpretations. “Interpretations such as those in opinion letters—like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do not warrant Chevron-style deference. They are ‘entitled to respect,’ but only to the extent that they are persuasive[.]” Christensen v. Harris Cty., 529 U.S. 576 (2000).
Nevertheless, business owners with tipped employees were pleased last week when the Trump Administration reissued Opinion Letter FLSA 2009-23 – abandoning the 80/20 rule. Under the 80/20 rule, businesses were prohibited from paying tipped employees at the tipped minimum wage when their side work, like napkin folding or counting the drawer, accounted for more than 20% of the employee’s time. Employers found it difficult to comply with the 80/20 rule because of the time tracking required. Whenever it is difficult to comply with a rule, plaintiffs’ attorneys are prepared to sue.
DOL now holds the position that so long as the side work is performed contemporaneously with direct customer service duties or for a reasonable time immediately before or after performing such direct service duties, the exact percentage breakdown does not matter. Where the line should be drawn, however, is unclear. The tasks must be closely related to the tip-producing work to be considered part of the same tipped occupation. For example, a tipped delivery driver and a prep cook perform distinct jobs. Any employee who holds “dual jobs” can only be paid at the tipped minimum wage for the tip-producing job and must be paid at least the regular minimum wage for the other job. Therefore, employers should continue to minimize excessive side work and have employees clock in and out if they work distinct jobs.
The rescission of the 80/20 rule may offer a temporary reprieve from parsing out the exact minutes spent rolling up silverware or locking the doors at night, but employers should continue to track time. Opinion letters can only offer so much defense. A smart employer should be armed with multiple defenses to withstand the tides of change in the White House.
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