National Restaurant Association files suit against U.S Dept of Labor

On June 16, 2011, The National Restaurant Association, The Council of State restaurant Associations, The National Federation of Independent Businesses filed suit against the U.S Dept of  Labor over amended FLSA regulations concerning the tip credit for tipped employees. The organizations are suing for declaratory and injunctive relief from  a new regulation that the DOL issued April 5th, 2011

The new tip credit notification rule took effect on May 5th, 2011.  To see the rules, visit www.dol.gov. or google FLSA fact sheet #15.

The Dept of Labor allows employers to provide written or oral notice to tipped employers if they elect to take the tip credit.  If they elect to do so, then the employer must inform the tipped employee how much of a credit they will take.  This new rule will help prevent employers from abusing the tip credit and also keep tipped employees informed about the tip credit.  Many servers, restaurant operators and even state workers I’ve encountered do not  really understand how the tip credit works or what is means.  This new notification  rule will promotes awareness about the tip credit and may finally foster compliance with the rules that have historically been abused by many restaurant owners.  A recent study,”Broken laws, unprotected workers,” the most comprehensive examination of wage-law violations in a decade found that of workers who received tips, 12 percent of them reported that their employer had stolen some of their tips.

But NRA President and chief executive, Dawn Sweeny states” We believe the DOL new rules put in effect with just one months notice and with out properly considering their impact on the nations nearly 1 million restaurants are confusing and will expose our members to regulation violations and enforcement actions.”

Applebee’s Restaurant who were also unhappy filed suit against the DOL and lost.  On April, 21st, 2011 The court of Appeals for the Eight circuit affirmed the DOL’ had the right to impose the new tip credit notification.

The NRA also stated that restaurants now face unnecessary regulatory burden and expense in complying with the new tip credit notice requirements.   But  families also face  unnecessary economic burdens when employers don’t follow the laws.  Annette Bernhardt, an author of the study, said,”When unscrupulous employers break the law, they’re robbing families of money to put food on the table. they’re robbing communities of spending power and they’re robbing governments of vital tax revenues.”

Knowledge is power and perhaps if more tipped employees understand what the tip credit is and when its abused, more employers will be forced to comply.  While the NRA  website boasts that the restaurant industry generates $ 604 billion a year in sales,  they don’t seem interested in protecting those workers who help make those sales possible.  It’s really a shame that rather than  investing  in educating restaurant operators about these regulations and protecting restaurant workers, the NRA  prefers  suing the government.

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