UPDATE December 12, 2017: The Department of Labor today announced a 30-day extension to submit comments on the rule; you now have until February 5, 2018 to submit comments. On December 4, DOL announced a Notice of Proposed Rulemaking (NPRM) regarding the tip regulations under the Fair Labor Standards Act (FLSA). Under the proposed rule, tip pooling would be permitted in businesses that do not take a tip credit, or regard servers’ tips as a portion of their income. This reversal of the 2011 prohibition would help decrease wage disparities between front-of-house and back-of- house employees. After the public comment period has closed, the department will issue final rules, reflecting the input it receives.
Take Action! Submit your comments on the proposed tip pooling rule today!
October 25, 2017: DOL has submitted a proposal to roll back an Obama-era rule restricting the use of tip pools to the White House’s Office of Management and Budget for review, however, the rule making notice does not provide detail on the proposal.
August 2, 2017: The National Restaurant Association filed a supplemental brief reinforcing the Tenth Circuit Court’s decision invalidating barring employers from including non-tipped workers in tip pools. The Tenth Circuit’s ruling explicitly rebuked the earlier decision out of the Ninth Circuit, with the Tenth Circuit panel saying that the US Department of Labor exceeded its authority by issuing the rule and that restaurants didn’t owe workers tips that never belonged to them. The NRA and the other groups said the Tenth Circuit’s ruling “conflicts directly” with the Ninth Circuit decision at issue and underscores the need for the US Supreme Court to intervene, review and issue a final ruling. Our hope is that the Supreme Court will still hear the case in order to prevent any future administration from reissuing such a rule and to address concerns regarding retroactive liability for our members from private lawsuits for the period the rule was purportedly in place.
On July 20, 2017 it was announced that the U.S. Department of Labor intended to issue a Notice of Proposed Rulemaking in August to rescind the current restrictions on tip pooling by employers. "The announcement this week by the DOL is an absolute game changer," said Jason Brandt, President & CEO of ORLA. “This is a welcome relief to Oregon employers in the hospitality industry who have been handcuffed by a 2016 appellate court decision barring them from utilizing tip pools.”
On June 30, 2017 the U.S. Court of Appeals for the Tenth Circuit ruled tips belong to the employer, who can presumably either keep them or distribute them in whole or part to employees as it sees fit. This directly conflicts with the Ninth Circuit’s decision last year in Oregon Restaurant and Lodging Ass’n v. Perez, (9th Cir. 2016), pet for cert. filed, (Jan. 19, 2017) and likely sets up a showdown this fall in the U.S. Supreme Court.
On January 19, 2017, the NRA's Restaurant Law Center filed a Cert Petition asking the U.S. Supreme Court to hear a case, National Restaurant Association, et al. v. U.S. Department of Labor, brought by the National Restaurant Association (NRA), the Oregon Restaurant & Lodging Association (ORLA), the Alaska Cabaret, Hotel, Restaurant and Retailers Association, and the Washington Hospitality Association. The case challenges the Department of Labor’s anti tip pooling stance that prevents cooks and dishwashers from receiving tips.
Bottom line, continued caution with respect to tip pooling policies is advised until a final ruling is decided. Read more from Fisher Phillips.
Tip Pooling Options to Consider (download pdf):
Tipped employees are those who customarily and regularly receive more than $30 per month in tips. Tips are the property of the employee; only tips actually received by the employee may be counted in determining whether the employee is a tipped employee. The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips. Learn more in the Fair Labor Standards Act (FLSA).
Given the current uncertainty regarding a final decision from the Court on tip pooling in Oregon, ORLA recommends consideration of the following options.
1. Eliminate tip pooling with BOH employees immediately.
By immediately reverting to tip pools that only include “customarily and regularly tipped employees” restaurateurs are choosing to avoid any additional liability that could be brought forward by a private lawsuit.
UPSIDE: Protecting yourself from any private claims instigated by employees against your restaurant who feel their tips are now being pooled unlawfully. Only you can determine the real risk being avoided here.
DOWNSIDE: If the case is heard by the Supreme Court and ruled in our favor, tip pooling with BOH employees would remain legal. If that happens and you have already changed your policy to eliminate BOH tip pooling, then it may be more difficult to change the policy yet again to the original policy you had in place before the most recent ruling.
2. Keep tip pooling in place with BOH employees until ORLA hears from the U.S. Supreme Court.
Because the Ninth Circuit Court denied our rehearing and a motion for a stay was granted, you have until at least December 5 to comply with the Department of Labor rules regarding tip pooling. Our stay remains in effect until we hear from the Supreme Court. This means you have until the mandate is lifted to fully comply with the rules and eliminate BOH involvement.
UPSIDE: You have time to inform, educate and put into practice a new tip pooling system that does not include BOH employees.
DOWNSIDE: A private claim could be instigated by employees against your restaurant who feel their tips are now being pooled unlawfully. Only you can determine the extent of that risk.
3. Eliminate tips altogether.
UPSIDE: Tipping continues to invite litigation in the court system. Replacing tipping with service charges and/or menu price increases and moving to more standardized wages across the entire restaurant operation provides a compensation model less likely to draw challenges from lawyers or organized labor.
DOWNSIDE: Oregonians are
accustomed to tipping and may be displeased with mandatory service charges. In addition, front-of-the-house workers could feel demoralized and frustrated by this different approach that results in less pay overall.
4. Consider alternative ways to share tips.
Examples include adding a kitchen gratuity line to checks or using a tip jar (if the jar stipulates that the tips are for all employees - or shared amongst all employees).
UPSIDE: Restaurateurs can give their customers a choice about whether the tip that they provide goes only to the server, or if they want the tip (or a portion of) to go to the kitchen staff.
DOWNSIDE: Customers are not accustomed to seeing more than one tip line on a check and may feel obligated to add more than they are comfortable with.
Q: What if my servers decide they want to voluntarily tip-out to the BOH employees? Is that allowed?
A: Yes, voluntary tipping-out is allowed. To protect your restaurant however, ORLA recommends servers be asked to provide management with a signed note or letter created by the server stating they are voluntarily tipping out to BOH employees. As a side note, voluntary tip pools are frequently under scrutiny and challenged as not being truly voluntary. A signed document alone will not ensure that someone cannot still challenge that type of tip-out as involuntary.
For additional questions, contact Greg Astley, Director of Government Affairs, at 503.682.4422.
July 20, 2017 - DOL intends to issue a Notice of Proposed Rulemaking to rescind the current restrictions on tip pooling by employers. SCOTUS granted DOL an extension through September 8, 2017.
May 3, 2017 - SCOTUS issued an Order, further extending DOL's timeline through July 10, 2017.
Mar. 2017 - SCOTUS granted DOL an extension through May 11, 2017.
Jan. 2017 - We submitted a petition for rehearing to the U.S. Supreme Court.
Sept. 2016 - The 9th Circuit denied our petition for a rehearing, however, 10 judges issued a blistering dissent.
Feb. 2016 - The 9th Circuit reversed their position and ruled in favor of the DOL, ignoring their own precedent in the Woody Woo case.
2013 - We won again in federal district court.
2010 - We won a decisive victory on this issue in Cumbie v. Woody Woo Inc., before the 9th Circuit Court of Appeals.
As we get ready to give thanks for all we’ve received this year, many of us are preparing to pay that good fortune forward to those less fortunate.
This Thanksgiving, several of our area restaurants are giving back to community members in need. They are contributing a combination of financial and in-kind donations and are encouraging their customers and the public in general to join them in the effort. Giving new meaning to the words “Food is Love,” here is a sampling of just a few restaurants in Oregon trying to make a difference for the neighborhoods they serve:
On Nov. 23, the German pub/biergarten will hold its annual Thanksgiving Day Feast. The restaurant will open its doors at 6 p.m., to serve its annual free turkey dinner. Nearly 100 pounds of turkey, stuffing, mashed potatoes and sides will be on the menu. Even though the event is free, guests are encouraged to donate to those in need, AND also bring a side dish to share.
Salt & Straw
For the third year in a row, the Portland-based scoop shop is teaming up with Urban Gleaners, a nonprofit hunger relief charity. For every Thanksgiving Celebration series pint sold, Salt & Straw will donate another one to Urban Gleaners. The goal: increase the number of people Urban Gleaners is able to serve and bring holiday cheer to those in need.
On Thanksgiving Day, the Portland-based, gluten-free, paleo and vegan-friendly cafe and catering company is closing all of its locations except one – in Sylvan Heights, where it will serve a family-style meal to guests at 11 a.m., 1 and 3 p.m. What’s on the menu? Guests can choose between a turkey, salmon or stuffed delicata squash entrée, plus dessert. Advance tickets are $40 per adult and $12 per child. Tickets on Thanksgiving Day are $45 per adult and $15 per child. All proceeds will benefit the Oregon Food Bank. And if you can’t make the dinner, but still want to contribute, learn more about the Oregon Food Bank and make a donation.
State Plan for Employees Launched July 2017
OregonSaves, a state-run retirement program for employees of businesses who do not currently offer a retirement savings plan, officially launched in July when 11 employers selected for the first pilot program began payroll deductions for participating employees.
November 15, 2017 was the deadline for employers with 100 or more employees in Oregon to either register to facilitate OregonSaves or certify that they are exempt from the program. If an employer missed the deadline, they should reach out to the OregonSaves Client Service team at (844) 661-1256 or firstname.lastname@example.org.
Employers that registered to facilitate OregonSaves are now in the process of entering their employees in the system, and their employees should expect to receive notice from OregonSaves about the program immediately after. Payroll deductions are expected to begin for employees in December and January.
In 2015, the Oregon Legislative Assembly enacted legislation, which created the Oregon Retirement Savings Board. House Bill 2960 tasked the Board with the establishment and oversight of a state-run retirement savings program providing employees with a flexible opportunity to save through payroll deductions and the ease of getting started with automatic enrollment and annual contribution escalation.
The new public website for OregonSaves is now live at OregonSaves.com and includes general information about the program as well as specific information for savers at Saver.oregonsaves.com and for employers at Employer.oregonsaves.com.
Employees in the pilot program of OregonSaves have already saved more than $146,000 since July. Approximately 72 percent of the nearly 2,500 eligible employees have chosen to stay in the program. Most employees are contributing the standard 5 percent of their gross pay. Currently, the average contribution rate is 4.7 percent, and the average contribution is approximately $57 per pay period.
Employers must collect (payroll deduction) and remit the payroll withholdings each pay period to the State. This will create additional paperwork for employers to deal with staff. There is no cost; the plan is funded into IRA's.
OregonSaves is scheduled to roll out in phases starting with larger employers. The registration deadlines for employers are as follows:
a. An employer employing 100 or more employees: November 15, 2017 (audit required)
b. An employer employing 50 to 99 employees: May 15, 2018
c. An employer employing 20 to 49 employees: December 15, 2018
d. An employer employing 10 to 19 employees: May 15, 2019
e. An employer employing 5 to 9 employees: November 15, 2019
f. An employer employing 4 or fewer employees: May 15, 2020
Ten days before the next deadline, employers who have yet to respond will receive a reminder notice. Employers are encouraged to register or certify as soon as possible to avoid the rush at the end. If an employer needs assistance, they should reach out to the OregonSaves Client Service team at (844) 661-1256 or email@example.com.
Employers who register to facilitate OregonSaves will have 30 days after registration to add all of their employees to the system. Once employees are added, the system sends them notice about the program. Employees then have 30 days to decide if they want to participate. After that 30-day period ends, employees who haven’t opted out will be automatically enrolled, and payroll deductions should begin on the first pay date afterward.
For example: Company A registers on Nov. 15. They need to enter their employees by Dec. 15. If they upload their employees on Dec. 15, their employees will have until Jan. 14 to decide if they want to participate. Company A will then begin payroll deductions on the next pay date after Jan. 14, such as Feb. 1 if they pay employees on the first day of the month.
The Oregon Retirement Savings Board has officially completed a second stage of rulemaking, which considered technical matters that were not in the first set of rules for OregonSaves, such as the process for employment services. The second stage of rulemaking began on June 14, 2017 and included three rulemaking advisory committee meetings. After holding a public rulemaking hearing on September 19, 2017 and considering input and feedback from a wide range of stakeholders, the Board filed updated rules with the Oregon Secretary of State’s Office on October 24, 2017. The updated rules have been posted on the Board’s website at Oregon.gov/retire/Pages/Rules.aspx.
More information and a complete list of frequently asked questions for employers and employees can be found at Oregonsaves.com/home/overview/faqs.html. | ORLA
FAQ’s about OregonSaves
Oregon Restaurant & Lodging Association Takes Legal Action Against the City of Bend to Protect Lodging Tax Dollars Intended for Tourism Promotion
[September 26, 2017 - Wilsonville, OR] – The Oregon Restaurant & Lodging Association (ORLA) filed a lawsuit today against the City of Bend for diverting the City’s room tax revenues away from tourism promotion and reducing the allocation for tourism promotion below what is required by law.
ORLA is challenging the validity and implementation of a recent Bend City Ordinance which amends the percentage of room tax revenue the City spends on the promotion of tourism and improperly diverts restricted room tax revenues to road maintenance.
“Cities must follow the restrictions in place for disbursement of the lodging tax revenues they collect,” said ORLA President & CEO Jason Brandt. “Unfortunately, Ordinance NS-2291 results in Bend being out of compliance with state law. The vast majority of tourism revenues in Bend can already be spent on general fund purposes so we hope our lawsuit results in acknowledgment from the courts that this recent act is in violation of Oregon law and must be undone.”
Bend City Ordinance NS-2291 violates state law (Oregon Revised Statue 320.350) in one or more of the following ways:
a) 9% of the City’s 10.4% city room tax rate has a set of restrictions for appropriate use of those funds. Within the 9% city room tax rate, the City is statutorily required to spend 30 percent on tourism promotion and tourism related facilities.
b) The remaining 1.4% city room tax rate is subject to a statutorily required 70% investment in tourism promotion and tourism related facilities.
“Lodging operators should be recognized as financial partners of local governments,” said Brandt. “As tourism becomes more successful, so does the tax revenue provided to local governments to invest in the projects important to local residents.”
A report from Longwoods International shows for every $1 invested in tourism promotion, $237 is generated in economic impact and $11 in tax revenue to the benefit of Oregon residents.
ORLA is engaged on a state and local level, helping local municipalities realize that shifts in tourism promotion investments can do more harm than good. Brandt argues there is a direct correlation between tourism promotion and a community’s own tax revenue. “Tourism promotion dollars are crucial to keeping Oregon’s visitor destinations top of mind. Local communities stand to lose significant tax dollars for their general funds if tourists choose to travel elsewhere.”
In 2003, the Oregon State Legislature passed HB 2267, mandating 70% of new or increased local lodging taxes be directed to tourism promotion or tourism related facilities. At that time, the City made the commitment to fund tourism promotion with 30% of the initial 9% tax rate in Bend. In 2013, the City’s residents approved Measure 9-94, which increased the City’s room tax rate from 9% to 10.4%. That 1.4% increase in tax rate is subject to the restrictions established in HB 2267. This past May the City passed an ordinance, in violation of the law, changing the allocation of tourism dollars.
“The City claims their new allocation of lodging tax dollars still follows state law. This is incorrect,” said Brandt. “There is an error in the total investment they are required to make in tourism promotions and/or facilities.”
The hospitality industry sees transportation investments as a crucial contributor to Oregon’s continued economic success. ORLA looks forward to working with Bend and other communities to help identify appropriate revenue streams to fund transportation investments including the unrestricted portion of lodging taxes.
For more information, contact ORLA President & CEO, Jason Brandt, at 971.224.1501.
The Oregon Restaurant & Lodging Association represents approximately 2,500 members, and advocates for over 9,900 foodservice locations and 2,200 lodging establishments in Oregon. The foodservice and lodging industry is responsible for 173,700 jobs bringing in over $10.8 billion in annual sales and generates over 54% of the annual tourism dollars spent in Oregon.
Restaurateurs in Portland, Oregon are banding together to raise funds and collect donations on behalf of Hurricane Harvey victims. Here are some of the events that have been and are being held to help those in need:
Through Sept. 3, the Austin-style taco shop’s locations donated all of its sales from its taco and drink specials. The proceeds went to the American Red Cross and the Hurricane Harvey Relief Fund.
Le Pigeon and the Little Bird Bistro
The French-Northwest themed restaurants donated 5 percent of their Aug. 31 sales to the United Way of Greater Houston, in an effort to help with Harvey relief efforts.
The restaurant said it raised more than $4,000 on behalf of the hurricane victims. Starting Sept. 1 through sell out, Texas-born owner Melissa McMillan gave 100 percent of sales from her Texas Barbecue Cheeseburgers. The money went to the Houston Food Bank. Each burger, plus two sides, is $12 each.
The Country Cat Dinnerhouse & Bar
Owners Adam and Jackie Sappington, along with the Little Green Pickle’s Carrie Welch, organized a Sept. 8 fundraiser featuring participation from 24 restaurants.
Throughout the month of September, Lardo will donate all proceeds from its sandwich sales to the Houston Food Bank.
Gladstone Street Pizza
The pizzeria donated a portion of its sales during the first week of September to “those affected by Hurricane Harvey.”
Summer was humming along with strong RevPar and occupancy performance for Oregon’s lodging industry – then came a late spree of Oregon wildfires.
It should come as no surprise that active forest management (especially in Oregon’s federally owned forests) will have to become a higher priority as part of ORLA’s advocacy efforts. Our wildfire season will end up costing hundreds of millions of dollars for direct fire suppression alone. This doesn’t include the alarming impacts these natural disasters have on the environment, paychecks, and jobs within the tourism industry.
The facts at the time of this writing are as follows:
Thankfully, many of Oregon’s elected leaders realize more must be done. Many of the facts shared in the bullet points above were included as part of a recent editorial in the Statesman Journal by State Representative Sherrie Sprenger.
In her comments, Representative Sprenger made a valiant case for stronger levels of active forest management in federal owned forests in particular. In a recent conversation with an ORLA member in Brookings, he mentioned the cost estimates to contain the Chetco Bar Fire alone will most likely exceed $100 million.
It begs the question – what can we do collectively as Oregonians to make sure appropriate funding is in place for active forest management? What can be done to ensure Oregon’s federally owned forests are not tinderboxes just waiting for the next lightning strike?
Clearly more needs to be done to bring collective voices together that can speak to the importance of more active forest management in an effort to protect Oregon’s natural resources. In the coming months, ORLA will be working with statewide elected leaders and other industry groups to formulate solutions that we hope result in fewer road closures and negative impacts to Oregon’s forests and communities.
In the meantime, we hope you consider assisting those who have been directly impacted by the tumultuous season. Visit Travel Oregon’s wildfire page at http://bit.ly/OTCwf for the latest information and resource links where those less impacted can support those in the industry who have been hit hard by Oregon's wildfires. To support the families that have had to evacuate, contact the Cascades Chapter of the Red Cross at redcross.org/local/oregon.