US Court of appeals overturns Biden's tip wage rule
A U.S. court of appeals on Friday overturned a rule that President Joe Biden’s administration had adopted to increase the pay of tipped employees. The court cited a recent U.S. Supreme Court decision which curtailed federal agencies’ ability to issue regulations.
The 5th U.S. Circuit Court of Appeals, located in New Orleans, is composed of a three-judge panel. Circuit Court of Appeals sided with two restaurant industry groups unanimously in finding that the U.S. Department of Labor’s 2021 rule violated federal labor laws.
No immediate comment was made by the Labor Department.
Employers were required to pay workers who do not receive tips the $7.25 federal minimum wage per hour and not the $2.13 for tipped jobs, when they perform non-tipped duties that last more than 30 minutes or 20% of their total time.
The new rule replaces a regulation that was adopted by the Republican former president Donald Trump, which stated that workers could receive a tipped minimum salary if their primary duties were to collect tips.
Two trade groups - the Restaurant Law Center, and the Texas Restaurant Association - filed a lawsuit against the Biden era rule in Texas shortly after it was adopted. They were appealing the decision of U.S. district judge Robert Pittman, who upheld the rule's validity last year.
Pittman concluded that federal wage laws were ambiguous regarding how tipped employees must be paid for tasks that are not tipped and that Labor Department's interpretation deserved "Chevron Deference" in accordance with a U.S. Supreme Court decision from 1984.
This doctrine requires courts to give deference to the interpretation of federal agencies when interpreting laws that they administer.
The conservative majority of the U.S. Supreme Court, which numbered 6-3 in June, scrapped the Chevron Doctrine and said that courts should use their own independent judgment to interpret ambiguous laws.
U.S. Circuit Judge Jennifer Walker Elrod cited this ruling, in writing for a panel of three judges, to refuse to accept the Department's interpretations of the Fair Labor Standards Act.
Elrod stated that the rule is contrary to the text of the law and "draws the line for the application of tip credit based upon impermissible factors and in contravention to the statutory scheme adopted by Congress."
She wrote that the Final Rule was not in compliance with the law because it contradicted the Fair Labor Standards Act statutory text. The panel included two Republican appointees and one Democratic nominee. (Reporting and editing by Alexia Garamfalvi in Boston; Reporting by Nate Raymond)
(source: Reuters)
