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Attorney General Nessel Joins Coalition in Federal Lawsuit to Protect Tipped Workers

LANSING — Michigan Attorney General Dana Nessel joined a coalition of attorneys general in filing a lawsuit Tuesday to stop a last-ditch effort by the outgoing Trump administration that would allow employers to withhold tips from their employees. 

The lawsuit challenges a U.S. Department of Labor (USDOL) rule that unlawfully seeks to eliminate the “80/20 Rule” which has protected tipped workers for decades. The rule ensures that any worker being paid $3.67 per hour in Michigan — due to their employer using the “tip credit” — spends at least 80% of their work-time doing tasks for which customers generally tip. The new rule eliminates the 20% cap on non-tipped work, among other provisions, and is an issue Attorney General Nessel and 18 other attorneys general raised in December 2019 to the USDOL

"This rule stands to hurt at least 100,000 service workers in Michigan who rely heavily on tips to care for their families. The pandemic has already caused an uphill battle for the service industry, and finalizing a rule that further impedes their ability to earn a living is unconscionable,” said Nessel. 

The Fair Labor Standards Act (FLSA) is the federal law establishing a baseline of critical workplace protections, such as minimum wage and overtime, for workers across the country. It permits employers to take a tip credit against their minimum wage obligations for the tips workers receive. 

The coalition asserts that the rule contradicts the text and purpose of the FLSA, and that the USDOL violated the rulemaking process requirements, including failing to analyze the impact the rule would have on tipped workers. In addition, the rule fails to justify its departure from the longstanding 80/20 rule. The states argue that the new rule will harm the states by reducing income tax revenue, increasing public benefits expenditures and imposing administrative costs.  

The coalition argues that while countless businesses and their employees — especially restaurants — struggle through this pandemic, relief should come from the federal government and not at the expense of workers.  

Attorney General Nessel joins the attorneys general of Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania and New York in filing this lawsuit. 

A copy of the lawsuit is available here