HR2312-119

What This Bill Does

The Tipped Employee Protection Act changes who counts as a tipped employee under the FLSA. Current law defines a tipped employee by reference to an occupation in which the worker customarily and regularly receives more than $30 per month in tips. This bill replaces that formulation with a definition that applies without regard to the employee's duties if the worker receives tips and other cash wages for an employer-determined work period at a rate that, combined with the required cash wage under the tipped-wage rule, is at least the federal minimum wage. The employer can define the work period as a day, week, two weeks, 28 days, or each pay period.

Who Benefits and How

Restaurant employers benefit because the definition removes a duties-based limit and gives employers more flexibility to treat tipped workers as tipped employees across an employer-chosen work period. Hospitality employers receive similar flexibility for service workers who receive tips. Payroll compliance vendors may benefit from demand for systems that track tips, cash wages, and employer-defined work periods under the revised definition.

Who Bears the Burden and How

Tipped restaurant workers could face lower wage protection for time spent on duties that are not themselves tip-producing if the combined tips and cash wages satisfy the federal minimum wage over the work period. Tipped hospitality workers face similar risk when the employer chooses a longer work period. Labor unions representing service workers may need to challenge or bargain over work-period choices. The Department of Labor Wage and Hour Division must enforce the revised definition and the interaction with the tipped cash-wage rule.

Key Provisions

• Amends the FLSA tipped-employee definition to apply without regard to the employee's duties.
• Requires tips plus other cash wages for the relevant work period to meet at least the federal minimum wage when combined with the required tipped cash wage.
• Authorizes employers to determine the work period used for the tipped-employee calculation.
• Provides examples of permissible work periods, including one day, one week, two weeks, 28 days, or every pay period.
• Applies the definition change to FLSA tipped-wage coverage rather than creating a new tipped-worker benefit program.