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Department of Labor Rescinds The 80/20 Rule For Tip Guidance


Last week, the Department of Labor issued an opinion letter in which it rescinded guidance that said tipped workers that are paid less than minimum wage must spend most of their time performing tipped-wage duties.  That guidance, implemented during the President Barack Obama era Department of Labor (often referred to as the 80/20 rule) required that the tipped workers spend 80% of their time performing tipped-wage duties such as waiting tables rather than folding napkins or cleaning dishes.

In its letter, the Department of Labor noted that it intended to clarify the Field Operations Handbook section 30d00(e), which previously had resulted in some confusion and inconsistent application.  With the issuance of its opinion letter, the Department of Labor stated that the letter was intended to clarify FOH section 30d00(e) in a manner that not only ensured consistent application of the Fair Labor Standards Act ("FLSA") but also gave employers a level of clarity to determine whether their actions were in compliance with the FLSA and provided workers full protection under the FLSA as well.

In its letter, the Department of Labor said it did not "intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with customer service duties."  In doing so, twenty five "acceptable" tasks were identified for tipped workers to perform.

This opinion letter comes on the heels of a July 2018 lawsuit filed by the National Restaurant Association that argued the guidance previously in place placed a burden on restaurant owners.  The lawsuit argued the 80/20 rule was "an arbitrary number to deal with."  As well, it was argued that when the President Obama era Department of Labor added the 80/20 rule, it did so "quietly" and  without notice to the public or an opportunity to respond.  However, workers and their advocates argued that getting ride of the 80/20 rule would allow businesses to take advantage of workers by paying them a sub-minimum wage even if they were not receiving frequent tips.

As of this writing, the National Restaurant Association is apparently still moving forward with its lawsuit.


For a copy of the Department of Labor's opinion letter:  https://www.dol.gov/whd/opinion/FLSA/2018/2018_11_08_27_FLSA.pdf

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