Court Rejects DOL’s Dual Jobs Regulation Interpretation

The U.S. Court of Appeals for the Ninth Circuit rejected the Department of Labor’s revised interpretation of the dual jobs regulation, which addresses the Fair Labor Standards Act’s tip credit provision in the situation where an employee works two different jobs for the employer – one tipped and one not.

Under the dual jobs regulation, an employer may not take a tip credit for work performed in a non-tipped job. The DOL’s Field Operations Manual contains an interpretation of the regulation, providing that where tipped employees spend more than 20% of their time in preparation work, no tip credit may be taken for that preparation work. The Ninth Circuit, however, rejected this interpretation in Marsh v. J. Alexander’s, LLC, finding it inconsistent with the language of the regulation, which speaks to being “engaged in an occupation.” The Ninth Circuit found the reference to “occupation” to mean employed in a “job,” not simply performing an activity. Thus, the regulation applies when an employee works two distinct jobs for the employer, and not when an employee performs different tasks within a job. The DOL’s interpretation, the Ninth Circuit found, was an inappropriate attempt to create a new regulation, apparently without going through the required regulatory approval process.