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U.S. Court of Appeals Overturns 2021 Amendments to Dual Jobs Regulation

What Happened

In a significant win for restaurant operators, the 5th Circuit Court of Appeals ruled on August 23 to nullify the U.S. Department of Labor’s 2021 Final Rule amending the “Dual Jobs” regulation. The court agreed with the Restaurant Law Center and the Texas Restaurant Association (TRA) that the Final Rule was arbitrary and capricious. It created a line for applying the tip credit based on improper considerations and went against the statutory scheme enacted by Congress. This ruling is a major victory for restaurant operators, the Association, the Law Center, and the TRA.

What It Means

The amendment to the Dual Jobs regulation is now unenforceable. Importantly, the Court noted that this decision does not affect the validity of the original dual-jobs regulation, which was not in question. Moreover, the ruling underscores the importance of the restaurant industry having its own legal representation to take on such cases when others may not.

What We’re Saying

“This decision is a big deal for restaurant owners and for tipped employees. For more than two and a half years, restaurant owners have worked in fear of not complying with the complicated and confusing requirements of the 2021 amendments. Today’s decision will alleviate the confusion and allow operators to focus on the economic challenges that threaten their business viability,” said Sean Kennedy, Executive Vice President of Public Affairs, National Restaurant Association.

“We are pleased that the court agreed with us and determined that the Wage and Hour Division overreached and exceeded its proper authority with its amendments to the ‘Dual Jobs’ regulation. The Department of Labor and its agencies had no authority to redraft the laws that Congress enacts, denying businesses the rights conferred by statute. The Restaurant Law Center and the Texas Restaurant Association brought this case because local restaurants would suffer irreparable damage from the illegal and unjust 2021 amendments to the ‘Dual Jobs’ regulation, and we’re satisfied to have ultimately succeeded in having the new regulation thrown out due to its illegality,” said Angelo Amador, Executive Director, Restaurant Law Center.