The hated “80/20” rule guidance for tipped workers has been withdrawn, much to the relief of restaurant and other hospitality employers. As reported by the law firm Jackson Lewis, employers will no longer have to “recreate, minute by minute, the daily activities of their tipped employees and separate them into ‘tip-generating’ duties, ‘related, but non-tip-generating’ duties, and ‘unrelated’ duties…”
Jackson Lewis is NJBIA’s HR legal hotline provider.
Specifically, the federal Wage and Hour Division does 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 (Fair Labor Standards Act) are met.”
At issue is whether an employee should be paid the federal minimum wage of $7.25 per hour ($8.60 in New Jersey) or the tipped minimum wage of $2.13 per hour and get credited for tips to meet the minimum wage requirements.
Under the 80/20 rule, employees who spent 20 percent of their time doing non-tipped work were to be paid regular wages for that time. In addition to tracking the time spent doing each task, employers also struggled to know which tasks were incidental work for tipped employees and which constituted a dual job. For instance, if a waiter or waitress wipes down and sets tables for the next guests, does that constitute a non-tipped task?
“This does not mean, of course, that tipped employees are allowed to spend an unlimited amount of time performing so-called non-tip-generating work,” Jackson Lewis writes. “If they do, they arguably will no longer be performing only a tipped occupation, but instead may be found to be performing dual jobs.”