A trio of restaurant and small business trade groups sued the U.S. Department of Labor on Thursday for not giving their members an opportunity to comment on a new rule that changes how employers notify employees about tip credits.  Under the Fair Labor Standards Act, employers are allowed to apply a portion of gratuity that employees receive to offset their minimum wage obligations, but are subject to a number of conditions, including informing employees about the tip credit. The minimum required cash wage for a tipped employee under the FLSA is $2.13 per hour.

A new rule issued by the DOL in April, which took effect in May, expands the notice that employers must give to employees about tip credits, which the National Restaurant Association, the Council of State Restaurant Associations and National Federation of Independent Business say is an unnecessary burden. The groups said they sued the agency in the District of Columbia district court, seeking to have the rule revoked.  “The economy is in a fragile recovery, but we continue to see the administration assail small business owners and entrepreneurs with costly rules and regulations that increase their burden and put their businesses at risk,” said Karen Harned, executive director of the NFIB’s small business legal center, in a statement on Thursday.

Harned says the tip credit rule is especially egregious because employers were given no opportunity to comment on the rule and have only a short window in which to comply, or risk losing their ability to apply any tip credit at all and be required to pay the full $7.25 federal minimum wage. The new rule also says that the employee has the right to retain all tips, unless the employer uses them in a lawful tip pooling arrangement. (click on link to read full story)