Certain employees – wait staff, for example – are exceptions to minimum wage laws. Because part of their income comes from tips, their employers are allowed to pay them a lower wage. However, what happens when an employee does both tipped work and non-tipped work? For example, maybe your waiter also does janitorial work at the restaurant. He makes less than minimum wage for his waiter duties. However, his janitorial work does not generate tips, which means the waiter is making far less than minimum wage for that part of his job. The 80-20 Tipped Work Rule was put in place to address situations where tipped employees perform non-tipped work. Recently, the Department of Labor (DOL) ended the 80-20 Tipped Work Rule. How will this change affect employees who receive tips?
The Previous 80-20 Tipped Work Rule
The Fair Labor Standards Act (FLSA) allows employers to use part of a tipped employee’s tips as “credit” toward their hourly minimum wage. Workers who did tipped and non-tipped work could only receive the tip credit for the tipped position.
However, some employees worked at positions that routinely handle tipped and non-tipped work. Previously, the Wage and Hours Division (WHD) regulations interpreted tasks as “related duties.” Tipped workers who spent more than 20% of their time on non-tip-generating tasks could not use the tip credit. Employers often could not pay employees a lower minimum wage because their non-tip-generating work was more than 20% of their job.
What Happens When the DOL Ends the 80-20 Tipped Work Rule?
The DOL’s Opinion Letter stated:
“We do 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 direct customer-service duties and all other requirements of the Act are met.”
Employers will no longer be forced to track every task a worker is performing, then splitting it into tip-generating and non-tip generating.
However, tipped employees may find that they are spending too much time on non-tip duties. If so, they may no longer be classified as tipped employees. Instead, they will be performing dual jobs. This may make a difference in their hourly minimum wage.
Was Your Job Affected When the 80-20 Tipped Work Rule Changed?
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