Workforce Bulletin

On August 23, the United States Court of Appeals for the Fifth Circuit issued its much-anticipated decision in Restaurant Law Center v. United States Department of Labor.  In one of the very first federal appellate court rulings since the Supreme Court overruled Chevron USA Inc. v. Natural Resources Defense Council, Inc.  this year, the unanimous three-judge panel concluded that the Department of Labor’s 2021 Final Rule regarding tipped employees and the minimum wage, commonly known as the “80/20 Rule” or the “80/20/30 Rule,” is both contrary to the pertinent statutory text and  arbitrary and capricious.  As a result, the court vacated the rule.

Background: Minimum Wage, the Tip Credit, Dual Jobs, and 80/20

The Fair Labor Standards Act (the “FLSA”) allows employers to count a portion of tips received by a “tipped employee” toward satisfying the federal minimum wage obligation.  The statute defines a “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.”  That portion of the statute has been in place, largely unchanged, since 1966.  Whether an employee counts as a “tipped employee” determines whether the employer may pay a reduced hourly wage of as low as $2.13, so long as the tips suffice to make up the difference to minimum wage.  Employees who are not tipped employees must receive at least the full minimum wage directly from their employer.

In 1967, the Department of Labor issued a regulation positing that workers may have more than one job with an employer, one of which involves tips and one or more of which does not.  The example the Department used was a hotel employee who works some shifts as a server in the hotel restaurant and other shifts as the hotel’s maintenance person.  The so-called “dual jobs” regulation took the position that the employer may pay the lower hourly wage, known as taking the tip credit, for the time spent in the tipped occupation of server, but not for the time spent in the untipped maintenance occupation.

Recently, in Lewis v. Crochet et al., the United States Court of Appeals for the Fifth Circuit rejected an attempt by a plaintiff to use the crime-fraud exception to the attorney-client privilege to compel two lawyers’ production of attorney-client privileged documents and information, which they obtained during the course of an investigation they conducted for Louisiana State University in 2013.

Lewis arose out of a lawsuit filed by the plaintiff, an African American woman formerly employed as an assistant athletic director for LSU, claiming that LSU and individual LSU board members discriminated and retaliated against her after she experienced and witnessed numerous instances of racist and sexist misconduct from LSU’s then-head football coach. The privilege dispute came to a head when plaintiff sought to compel LSU’s production of information from the 2013 Title IX investigation into sexual harassment allegations by LSU students against the then-head coach. Those documents remained in the possession of the law firm that conducted the investigation. Attempting to overcome LSU’s assertion of the attorney-client privilege, plaintiff invoked the crime-fraud exception arguing that LSU sought to use its lawyers to fraudulently conceal the documents in violation of Louisiana law prohibiting, among other things, the concealment of public records. The trial court agreed and ordered disclosure, but on an appeal filed by the two lawyers that conducted the 2013 investigation, the Fifth Circuit reversed.