Tipped Employees and the “80/20 Rule”
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.
| Server | Busser | Bartender | |
| Tip-producing | Providing 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 supporting | Dining 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 occupation | Preparing food, including salads Cleaning kitchen or bathrooms | Cleaning kitchen or bathrooms |
To summarize, the final rule recognizes the following three components of a tipped employee’s work duties:
- Tip-producing work — taking the tip credit is allowed.
- 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.”
- 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.
