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Connecticut: New Law Codifies “80/20” Rule for Compensating Tipped Employees

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All Employers with CT Employees in Hospitality and Service Industries

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April 1, 2020*

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Hospitality employers who take tip credits when compensating employees will be relieved to hear that Connecticut’s legislation has made new strides to clarifying how tipped employees must be paid.  The recently-passed Public Act 19-1 requires the Connecticut Labor Commissioner to adopt regulations codifying the federal “80/20” rule.  The Act requires the Labor Commissioner to post a notice of intent to adopt these regulations by April 1, 2020, though the actual effective date of the rule is not yet clear.

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Maryland: Minimum Wage to Increase to $15 per Hour by 2025

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All Employers with MD Employees

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June 1, 2019

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The Maryland legislature recently overrode Governor Hogan’s veto of a minimum wage bill that will increase minimum wage to $15 per hour by 2025, and by 2026 for employers with 14 or less employees. HB 166/SB 280 raises minimum wage to $11 per hour on January 1, 2020, and then by $0.75 each year thereafter until it reaches $15 on January 1, 2025. Small employers will see annual increases of $0.60 each year until July 1, 2026. Workers under 18 years old, down from 20 years, are required to be paid at least 85% of the state minimum wage.

Additionally, employers who take a tip credit for tipped employees must provide employees with a wage statement each pay period showing their effective hourly tip rate “as derived from employer-paid cash wages plus all reported tips for tip credit hours worked each workweek of the pay period.”

Action Items

  1. Update projected budgets to account for increases in minimum wage.
  2. Update payroll processes to account for minimum wage increases.
  3. Update tipped employee wage statements as required.
  4. Look for forthcoming tip credit wage statement regulations from the Commissioner.
  5. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2019 ManagEase

Massachusetts: New Guidance for Calculating Wages for Tipped Employees

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All Employers of MA Tipped Employees

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January 1, 2019

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The “Grand Bargain” added a clause to the service rate statute stating that an employer shall calculate the “amount required by clause (2) at the completion of each shift worked by the employee.” The Massachusetts Attorney General’s office recently released additional guidance on what this means.

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U.S. DOL Announces Intent to Repeal Rule Restricting an Employer’s Use of Tips Where No Tip Credit is Taken

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July 20, 2017

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On July 20, 2017, the Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) announced its intention to repeal a 2011 rule stating that customer tips are always the property of an employee, regardless of whether or not the employer takes a tip credit, and that employers were prohibited from using tip pooling to subsidize the hourly wages of untipped employees. Further, a DOL spokesperson reportedly told Bloomberg BNA that DOL investigators are forbidden from enforcing the 2011 regulation ahead of the proposed rule.  Once the rule is rescinded, employers who do not apply a tip credit against a tipped employees’ wages will be able to keep or distribute gratuities in any way the employer sees fit.

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Tenth Circuit: Employers Who Take Tip Credits May Keep Customer Gratuities

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All Employers with CO, KA, NM, OK, UT, and WY Employees

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July 3, 2017

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In Marlow v. New Food Guy, the Tenth Circuit stated that employers of tipped employees may keep customer gratuities, as long as the employee is already paid the required minimum wage.  An employer’s retention of tips under this circumstance does not violate the tip credit provision of the Fair Labor Standards Act (“FLSA”).

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