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Employers Beware: The Tip Credit Is Back

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Hospitality employers take note: The Department of Labor’s (DOL) tip rule has been struck down. The tip credit is a provision of the Fair Labor Standards Act (FLSA) that allows employers to pay tipped employees a lower direct wage as long as their tips make up the difference to reach the minimum wage. However, the tip credit has been a source of confusion and litigation for many hospitality employers, which have faced conflicting and changing rules from the DOL on how to apply it. 

Background

In 2021, the DOL issued a final rule that set strict limits on the

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