Connecticut Employment Law Blog Insight on Labor & Employment Developments for Connecticut Businesses

More New Employment Law Regulations: Fluctuating Work Week & Tip Credit Under FLSA

Posted in Wage & Hour

Last month, it was the EEOC that released new regulations on the ADA.  This week, it’s the Wage & Hour Division of the Department of Labor, that has released new regulations on the Fair Labor Standards Act.  The new regulations will go into effect in early May 2011.

While some of these revisions are more technical in nature, there are some others which could have an impact on employers and some portions which aren’t revisions, but additions.  Here are a few highlights:

  • For employers that use a fluctuating workweek method of payment of employees (in which an employee is paid a fixed salary for fluctuating hours), there had been some discussion that the DOL might allow bonus payments in such instances. Instead, the DOL questioned such payments noting that "bonus and premium payments … are incompatible with the fluctuating workweek method."

Connecticut employers should remember the guidance that came out from the Connecticut Supreme Court back in 2008 about this method as well.  In that case, the Court looked to the federal regulations for guidance on interpreting state laws; the new regulations further complicate that and therefore, employers that use the fluctuating workweek method ought to consult with an attorney to ensure that it will be in compliance with the new regulations.

If you’d like more information about it, there’s a notable blog post from the Wage & Hour Litigation Blog here. 

  • Another major area that the regulations addressed was whether an employer has to "inform" an employee of tip credit provisions.  The DOL stated that employers do need to "inform" the employees of the tip credit, but also notify the employee of various items before utilizing the method. These items include:
    • the direct cash wage the employer is paying the employee
    • the amount the employer is using as a credit against tips received

The regulations contain a more detailed list of information to be provided.  Therefore restaurants in particular should review these items and make sure that their policies and practices will be compliant with these new regulations.

Of course not all of the revisions are notable. In one area, the regulations revise existing regulations to remove the words "firefighter" and replace them with "employee in fire protection activities". 

You can download all of the regulations here