80/20 Rule Retracted and Clearer Guidelines Reinstated
The Department of Labor retracted the 80/20 Rule and established new guidelines. This change considerably reduced the existing confusion regarding tipped credits for tipped employees.
The 80/20 Rule, which began in 2009, prohibited employers from taking a tip credit from employees who spent more than 20 percent of their time doing non-tipped work. Keeping track of which employees were working on what tasks and monitoring and documenting the work was difficult and confusing. Some duties were related to tipped work even though not directly dealing with customers.
Based on the Fair Labor Standards Act (FLSA), restaurant employers can pay a tipped employee $2.13 per hour and take a tip credit equal to the difference between the tipped wage and federal minimum wage. The federal minimum wage is $7.25 per hour. Some work is related to the tipped employees relationship with the customer.
According to JD Supra, Opinion Letter FLSA2018027 reinstated an earlier opinion letter that clarified which duties would be related to tipped activities. For example, a list of related duties is not limited to but includes the following:
- Taking orders from guests for beverages or food
- Checking with customers to get feedback and correct problems
- Checking IDs for minimum age for alcoholic beverages
- Collecting customer’s payments
- Writing orders on bills or entering them into computers
- Preparing and totaling checks
- Giving menus to customers and answering questions about menu items
- Removing dishes or glasses from tables
- Cleaning tables and counters
- Preparing tables for meals
- Escorting customers to tables
- Stocking service areas with coffee, silverware, etc.
- Bringing wine selections to tables and pouring wine
- Filling salt, pepper, sugar, cream, condiments and napkin containers
- Doing food preparations such as salads, cold dishes, desserts and brewing coffee
- Garnishing and decorating dishes in preparation to serving
Employees, who actually work dual jobs, such as a server who also works for the restaurant as a maintenance person, would fall under the 80/20 Rule. However, it would be clear when the employee was doing the server job and when doing the maintenance work.
This change is a significant one for restaurant owners and should reduce litigation that arose out of the confusion created by the 80/20 Rule.
At Stephen Hans & Associates we provide employers with legal assistance for many different types of employment related issues.