Tipped Employees and the “80/20 Rule”

July 23, 2023 - Tip-pooling, Wage Theft

The Federal tip credit: 

The Federal FLSA allows employers of tipped employees to take a tip credit of up to $5.12 per hour against the employee’s wages if that amount plus the employee’s tips equal at least the federal minimum wage. Employers who take the maximum tip credit only need to pay the employee direct wages of $2.13 per hour.

The 80/20 Rule: 

Now, the Department of Labor has revised the “80/20 Rule” The new 80/20 rule makes clear that employers can take a tip credit only for “tip-producing work” — meaning work that is part of the employee’s tipped occupation or work that directly supports it. Restaurants and bars which violate the “80/20” Rule are engaged in wage theft. If you work at such a restaurant, you should consider hiring a wage theft attorney.

Under the 80/20 rule, the employee must spend at least 80% of their workweek performing tip-producing duties and no more than 20% on non-tipped duties.

The 80/20 rule is not satisfied if the employee spends more than 20% of their workweek on non-tipped work — because this would mean that they are no longer engaged in a tipped occupation.

The Department of Labor final rule contains examples for tipped employees employed in restaurants and hotels, nail salons, and valet parking.  Below is a summary of the provisions related to restaurant servers, bussers, and bartenders.  

Tip-producingProviding table service
Taking orders
Making recommendations
Serving food and drink
Walking to kitchen or bar to retrieve food or drink orders and deliver to table
Toasting bread to accompany prepared eggs Adding dressing to pre-made salads (P)Scooping ice cream onto pre-made dessert
Ladling pre-made soup
Assembling bread or chip baskets Placing coffee in pot for brewing
Filling water and drink glasses Verifying customer food allergies Cleaning spill or dropped item at or adjacent to customer table Processing credit card and cash payments
Setting a table while customers are seated Removing plates, glasses, and silverware duringmeal service Bringing highchair or coloring book for child
Assisting with server tip-producing work
Filling water glasses
Clearing dishes from tables
Fetching and delivering items to and from tables
Bussing tables
Changing table linens
Setting tables (resetting tables between customers
Making and serving drinks
Talking to customers at bar
Serving food to customers at bar
Changing TV channel for customer
Directly supportingDining room prep work
Refilling shakers and ketchup bottles
Rolling silverware
Folding napkins
Sweeping or vacuuming under tables
Setting and bussing tables
Cleaning around beverage station  
Pre- and post-table service prep work
Folding napkins
Rolling silverware
Stocking busser station
Vacuuming dining room
Wiping down soda machines, ice dispensers, food warmers, and other service alley equipment 
Slicing and pitting fruit for drinks
Wiping down bar
Wiping down tables in bar area
Cleaning bar glassesArranging bottles behind bar
Fetching liquor and supplies
Vacuuming under tables in bar area
Cleaning ice coolers and bar matsMaking drink mixesFilling drink mix dispensers
Not part of tipped occupationPreparing food, including salads Cleaning kitchen or bathroomsCleaning kitchen or bathrooms

To summarize, the final rule recognizes the following three components of a tipped employee’s work duties:

  1. Tip-producing work — taking the tip credit is allowed.
  2. Directly supporting tip-producing work — the tip credit can be taken “if the directly supporting work is not performed for a substantial amount of time.”
  3. Work that is not part of the tipped occupation — the tip credit cannot be taken.

Is your bar or restaurant complying with the 80/20 Rule? If not, call Flynn Law Firm today. 

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