AG Shapiro Leads Federal Lawsuit to Protect Tipped Workers

AG Shapiro Leads Federal Lawsuit to Protect Tipped WorkersImage via Pennsylvania Office of Attorney General

HARRISBURG, PA — Pennsylvania Attorney General Josh Shapiro and Illinois Attorney General Kwame Raoul are leading a coalition of nine attorneys general in filing a lawsuit to stop a last-ditch effort by the Trump Administration to allow employers to withhold tips from their employees.

The lawsuit challenges a U.S. Department of Labor (USDOL) rule that unlawfully seeks to remove the limit on non-tipped work a tipped worker may complete and still receive only the tipped minimum wage, $2.13 per hour federally and $2.83 per hour in Pennsylvania. The Fair Labor Standards Act (FLSA) is the federal law establishing a baseline of critical workplace protections, such as minimum wage and overtime, for workers across the country. It permits employers to take a credit against their minimum wage obligations for the tips workers receive.

For thirty years, USDOL regulations have capped the amount of non-tipped work a tipped worker may do at twenty percent of their working time called the “80/20 rule.” The new rule eliminates that cap, among other provisions. Illinois, Massachusetts, and Pennsylvania led a coalition of nineteen state attorneys general in a comment opposing the proposed rule.

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This is the second time the PA Office of Attorney General has sued Trump’s Department of Labor. When USDOL tried to make it easier for employers to escape liability for violating workers’ rights, AG Shapiro partnered with New York Attorney General Letitia James, and others, and had the rule struck down.

“This new rule issued by the U.S. Dept. of Labor is indefensible and would result in tipped workers doing more work for less pay all in the midst of a global pandemic,” said Attorney General Shapiro. “Businesses and employers are struggling and need real relief during this pandemic but it cannot come out of the pockets of their employees. My office will continue to fight for workers in Pennsylvania and across the country to earn fair pay for a fair day’s work.”

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The coalition asserts that the rule contradicts the text and purpose of the FLSA, and that the USDOL violated the rulemaking process requirements, including failing to analyze the impact the rule would have on tipped workers. In addition, the rule fails to justify its departure from the longstanding 80/20 rule. The states argue that the rule will harm the states by reducing income tax revenue, increasing public benefits expenditures, and imposing administrative costs.

As so many businesses and their employers — especially restaurants — struggle through this pandemic, the coalition argues relief should come from the federal government and not at the expense of workers.

The suit was co-led by Pennsylvania Attorney General Josh Shapiro and Illinois Attorney General Kwame Raoul, and joined by Delaware, the District of Columbia, Maryland, Massachusetts, Michigan, New Jersey and New York.

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