On January 6, 2020, Governor Ned Lamont signed bipartisan legislation addressing rates of pay for restaurant workers. The Governor vetoed a previous version of the bill which would have applied retroactively and effectively ended the viability of approximately two dozen pending minimum wage lawsuits. The new law does not apply retroactively, allowing the pending minimum wage suits to proceed.

In Connecticut, restaurants are permitted to pay waiters, servers, bartenders, and busboys – employees who perform “tipped” work – less than the current $11.00 hourly minimum wage based upon a tip credit. Tips are meant to cover, if not exceed, the difference between “tipped” and “non-tipped” hourly rates. “Tipped” work includes directly serving patrons, while “non-tipped” work includes the myriad of other tasks central to operating a restaurant, such as cleaning and table setting. Kitchen staff generally performs “non-tipped” work, and should be compensated at or above the $11.00 hourly minimum wage.

Because of the inherent difficulty in tracking a server’s time spent on discrete “non-tipped” tasks, restaurants followed the “80/20” rule, where if an employee spent at least 80% of his or her time on service tasks, the restaurant could pay the “tipped” hourly wage for the duration of the shift. (The 80/20 standard is derived from the federal Fair Labor Standards Act, which currently provides a significantly lower minimum wage than Connecticut). Connecticut previously adopted the 80/20 standard by regulation.  Whether an employee can be paid the lower “tipped” wage has focused on the 80/20 standard, with litigation focusing on whether employees claiming that they should have been paid at the higher “non-tipped” rate performed “non-tipped” work for more than 20% of the time.

The new law repeals Connecticut’s 80/20 regulation, and asks that industry representatives, employees, and other stakeholders comment on a replacement rule or standard by April 1, 2020. Whether the new regulation formally adopts the 80/20 rule, or some other formulation, remains to be seen. Commentators expect that, no matter the new rule, it will provide greater clarity than the previous scheme.

The bill also provides for the Connecticut Department of Labor to hire additional wage and hour investigators, and conduct seventy-five random audits a year to ensure that restaurants comply with the still to be determined new rules.

Finally, the bill makes it more difficult for employees to assert their claims as part of a class action. Specifically, plaintiffs will have to demonstrate that the putative class “performed nonservice duties . . . for more than a de minimis amount of time, that were not incidental to service duties” and that plaintiffs’ improper compensation resulted from the performance of “nonservice duties.”  Whether this will result in fewer class actions in the hospitality industry remains to be seen, because courts will still have to determine whether the non-service work was “de minimis,” which is itself a vague standard.

To discuss the impact of this legislation on your restaurant’s record keeping and payroll practices, please contact any member of the Murtha Labor and Employment team.