5th Circuit Court overturned DOL's 2021 tip credit rule as arbitrary and contrary to FLSA.

5th Circuit Court of Appeals struck down the DOL's 80/20/30 tip credit rule, finding it arbitrary and capricious. The rule, introduced in 2021, restricted employers from taking tip credit for more than 20% of an employee's workweek and losing it when an employee performed directly supporting work for over 30 minutes. The court stated it contradicted the Fair Labor Standards Act's clear text and intent. The ruling affects employers across the U.S. and may have implications for the future interpretation of the FLSA.

August 26, 2024
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