Alicia Koepke, Shareholder of Trenam Law.

Wage-and-hour claims are among the most common—and expensive—employment claims. Claims under the Fair Labor Standards Act (FLSA), for example, can lead to employees recovering not only unpaid minimum wages or overtime pay, but also double damages, attorney fees and costs. Because employees often file such lawsuits as class or collective actions, the potential liability can be substantial. Wage claims provide significant risk not only to businesses, but also to their owners and supervisors, who can be sued in their individual capacity for FLSA violations. Thus, it is imperative that employers properly compensate their workforce. To do so, employers must keep track of this ever-changing area of the law. This article addresses recent changes to Florida and federal wage-and-hour laws, and discusses changes expected in the year to come.

Recent Changes

  •  Tipped Employees

Effective Jan. 1, Florida’s minimum hourly wage increased to $8.46 from $8.25. Employers must pay at least this rate for all hours worked by Florida nonexempt employees. For Florida employers taking an eligible “tip credit,” the minimum direct hourly wage to tipped employees is now up to $5.44 from $5.23.

In addition to the increase in minimum wages owed to tipped workers, other recent changes to the laws regulating tipped employees include:

  • Employers May Not Retain Employees’ Tips

In March 2018, Congress amended the FLSA to prohibit employers, managers and supervisors from retaining any part of employees’ tips—regardless of whether a tip credit is taken.

  • Tip Pooling Restriction Eliminated When No Tip Credit Is Taken

The March 2018 amendments and subsequent Department of Labor (DOL) guidance permit employers who do not take a tip credit to allow nonsupervisory employees who are not customarily tipped to participate in tip pools.

  • DOL (Largely) Eliminates Its 80/20 Rule

In November 2018, the DOL reissued an opinion letter largely scrapping its “80/20 Rule.” That rule prohibited employers from taking a tip credit for time spent by tipped employees on nontip-producing work related to their tipped occupation if such employees spent more than 20 percent of their time on such non-tipped work. The rule was a practical nightmare because it required employers to track all of their tipped employees’ tasks.

In the reissued opinion letter, the DOL said it will not limit the amount of duties “related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties” or “for a reasonable time immediately before or after performing such direct-service duties.” (Whether duties relate to a tip-producing occupation is significant; if an employee has duties unrelated to his tipped position, the employee may have “dual jobs,” and DOL regulations prohibit employers from taking a tip credit for time spent in a nontip-producing job.)

Anticipated Changes

  •  DOL Proposes New Overtime Rule

Last fall, the DOL announced its plan to issue a new proposed rule governing the minimum salary (currently $23,660 per year) required for most employees to be exempt from overtime pay under the FLSA’s executive, administrative and professional exemptions. The DOL recently submitted this proposed rule to the Office of Management and Budget for review, but we do not know what it says. We expect it to contain some increase in the minimum salary threshold, but not as significant an increase as the DOL’s 2016 proposal, which would have more than doubled the current minimum salary. (As a reminder, to be exempt from overtime pay, employees must meet certain duties requirements in addition to receiving the minimum salary.)

  • DOL Plans to Clarify Its Position on Joint Employment

The DOL also said it intends to issue a rule “to clarify the contours of the joint employment relationship.” Joint employment under the FLSA has significant implications because “when two or more employers jointly employ an employee, the employee’s hours worked for all of the joint employers during the workweek are aggregated and considered as one employment, including for purposes of calculating whether overtime pay is due.” Joint employers are jointly and severally liable for FLSA compliance.

In June 2017, the DOL withdrew a previous Administrator’s Interpretation that took an expansive position on joint employment. Naturally, employers hope the DOL’s proposed rule will limit joint employer liability to businesses with direct and immediate control over employees. Exactly what standard will be endorsed by the DOL remains to be seen.

  • DOL Plans to Clarify the “Regular Rate” Regulations

Finally, the DOL has said that it will clarify its regulations relating to the “regular rate” of pay. The regular rate is the rate used to calculate overtime pay owed to nonexempt employees. Some employers are surprised that the “regular rate” includes more than just an employee’s standard hourly rate; for example, it includes commissions and nondiscretionary bonuses. It is unclear how the DOL will clarify the regular rate, but any simplification will be a welcome change for employers.

Conclusion

Given the ever-changing legal landscape, and the fact that federal, state and local law may impose additional or different obligations, employers with questions about their wage-and-hour obligations should consult with counsel to ensure they meet applicable legal requirements.

Alicia H. Koepke is a shareholder at Trenam Law’s Tampa, Florida office, where she focuses her practice on employment and business law. She serves as co-chair of Trenam Law’s hospitality industry group and its commercial litigation practice group. Contact her at akoepke@trenam.com.