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Labor/Employment Policy Shifts Under Biden Administration

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Whenever the White House changes hands, particularly when the new president is from a different party than his predecessor, employers can expect to see shifts in how various labor and employment policies are interpreted and enforced.

Based on signals from President Joe Biden and new Labor Secretary Martin J. Walsh, the current administration is no exception, although many of their actions are undoing changes the Trump administration announced on its way out the door.

One area where the administration has already taken action is the issue of compensation for tipped workers under the federal Fair Labor Standards Act.

As any employer in the food and hospitality industry knows, an employer may take what’s called a “tip credit” and pay tipped workers less than the existing minimum wage based on the expectation that such workers will make up the difference in tips.

Some employers have abused this rule by taking a credit against workers’ wages for time they spent doing non-tip-generating tasks (food prep and cleanup).

In the past, the Department of Labor urged employers to follow the “80/20” rule, under which an employer could take a tip credit as long as a tipped worker’s non-tip-producing “side work” didn’t exceed 20 percent of his or her worktime.

The Trump administration did not vigorously enforce this rule and announced last winter that it was eliminating it altogether.

But Biden’s Department of Labor announced that the rule was being reinstated.

What’s more, new guidance seeks to bar employers from taking the tip credit altogether for time doing work that does not directly support tip-producing work (i.e., cleaning garbage cans or preparing food) while clarifying that no more than 20 percent of tipped workers’ time can be spent on non-tipped side work that does directly support tipped work, like folding napkins or refilling salt-and-pepper shakers.

The Biden administration has also taken action on the definition of “independent contractor” under the FLSA.

Trump’s DOL had announced an employer-friendly five-part test that largely defined an independent contractor’s status based on the level of control and opportunity for profit and loss, which likely would have led to more employees being classified as independent contractors.

Biden’s DOL, however, announced this change would not be taking effect and that the federal government would be sticking with the more restrictive “economic realities” test that courts have traditionally utilized.

Observers also predict that Biden will seek to further narrow the definition of independent contractor.

Meanwhile, Secretary Walsh has stated publicly that he favors raising the salary threshold for “exempt” employees not eligible for overtime under the FLSA beyond the current amount of $35,568 per year.

While it’s safe for the time being to continue relying on the current threshold, any employee below that threshold needs to be paid hourly.

Lastly, there could be changes on the minimum wage. Biden has publicly supported an increase to $15 an hour, and Walsh supported a $15 minimum wage as mayor of Boston.

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