Tipped Employee Protection Act
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Would rewrite the federal definition of a "tipped employee" under the Fair Labor Standards Act, dropping the requirement that duties be considered and instead qualifying any worker whose tips plus cash wages meet the minimum wage over an employer-set work period.
The change would affect which workers employers can pay a reduced cash wage and count tips toward the federal minimum, a rule central to pay practices across the restaurant, hospitality, and service industries.
What this bill would do
What it would do
The bill would amend the Fair Labor Standards Act's definition of "tipped employee." Currently, that status depends on customarily and regularly receiving more than $30 a month in tips while working in a tip-generating occupation. The bill would instead define a tipped employee as any worker who receives tips and other cash wages for a work period, without regard to the employee's duties, at a rate that when combined with the required cash wage is not less than the federal minimum wage. It would also let employers define what counts as a "work period" for this purpose — for example a day, a week, two weeks, 28 days, or a pay period — rather than using a single statutory standard. The bill does not change the federal minimum wage itself or the required tip-credit cash wage amount; it changes only who qualifies as a tipped employee and over what time period that qualification is measured.
Key provisions
- 1Would redefine "tipped employee" to remove consideration of the employee's job duties, focusing instead on whether tips plus cash wages meet the minimum wage
- 2Would let employers designate the work period (such as daily, weekly, biweekly, every 28 days, or per pay period) used to measure whether tips plus wages meet the minimum wage
Who would be affected
Employers in restaurants, hospitality, and other service industries that use the tip credit to pay workers below minimum wage in cash, and the millions of tipped workers — servers, bartenders, and similar employees — whose eligibility for reduced cash-wage pay depends on this definition. The Department of Labor, which enforces the Fair Labor Standards Act, would also apply the revised standard.
Why it matters
Removing the duties test could let employers classify a broader range of workers, including those who spend significant time on non-tipped tasks, as tipped employees eligible for reduced cash wages. Letting employers set the work period used to measure combined tips and wages could also change how compliance is calculated and enforced.
What would change
Changes to existing law
Amends Fair Labor Standards Act of 1938, 29 U.S.C. § 203(t) (Sec. 2)
Replaces the duties-based, $30-a-month tip threshold with a definition based on combined tips and cash wages meeting minimum wage, measured over an employer-set work period.
How implementation would work
The Department of Labor's Wage and Hour Division, which enforces the Fair Labor Standards Act's tip-credit rules, would apply the revised definition when determining whether an employer properly classified a worker as a tipped employee. Because the bill lets each employer set its own work period for measuring combined tips and wages, enforcement and audits would need to account for varying employer-chosen periods (daily, weekly, biweekly, 28-day, or per pay period) rather than a single uniform standard, which could affect how violations are identified and calculated during investigations or litigation.
Legislative status & sources
Latest action
POSTPONED PROCEEDINGS - Pursuant to clause 1(c) of rule XIX, the Chair announced that further proceedings on H.R. 2312 is postponed.
Official CRS summary
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This bill modifies the definition of a tipped employee under the Fair Labor Standards Act of 1938 (FLSA) to exclude consideration of an employee's duties when determining if the employee is a tipped employee.
Under current law, tipped employees may be paid less than the federal minimum wage (currently $7.25 an hour), but the total of their cash wage and tips must be at least equal to the federal minimum wage. Under the FLSA, a tipped employee is currently a worker who customarily and regularly receives more than $30 a month in tips.
The bill broadens the definition of tipped employee to include any worker who receives tips and other cash wages for a work period at a rate that is at least the federal minimum wage, without regard to the duties of the employee. Under the bill, the work period is a work period that is determined by the employer.
Legislative subjects
Labor and Employment; Labor standards; Wages and earnings
Committee report
H. Rept. 119-420