Dec 4, 2018
Department of Labor Issues New Guidance on "80/20 Rule"
The US Department of Labor released an opinion letter earlier this month that provides clarification on the “80/20 rule.” For many years this rule has been interpreted to mean that tipped employees who spend more than 20 percent of their working hours on non-tipped duties like rolling silverware, prepping salads, sweeping the floor, etc. could NOT be paid a sub-minimum wage (e.g. could not use the tip credit) for that time.
Keeping track of the percentage of tipped employees' time spent on non-tipped duties was a logistical nightmare, in addition to being a lightning rod for lawsuits involving restaurants and plaintiffs' attorneys.
The updated opinion letter recognizes that restaurant servers perform both tip-generating and non-tip-generating duties during the course of a shift, and it is challenging for employers to account for the precise amount of time spent on each task. (even admitting that there has been "confusion and inconsistent application" which required "clarification.")
“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,” the opinion letter said.
According to the letter, DOL recognizes there are still “dual jobs,” for which workers could be paid differently. If an employee is spending the majority of their time during a shift cleaning the bathroom or dining room then they should be paid the full minimum wage for time spent performing those duties.
In a recent Nation's Restaurant News podcast on the history and the future of the 80/20 rule, attorney Jeff Brecher from Jackson Lewis recommended printing out a copy of the opinion letter to keep on file in case there is a reversal of this DOL guidance in the future.
The opinion letter also references duties that would be considered “core or supplemental,” as outlined in the tasks section Occupational Information Network (O*NET) summary report for tipped positions like "waiters and waitresses" and "bartenders."
Attorney Brecher recommended reviewing the job duties outlined on the O*Net website to compare with your tipped employees' job requirements, particularly if you have a list of sidework required during servers or bartenders' shifts (make sure you click on the expanded tasks for the full list). This will give you a good sense of whether or not the sidework your tipped employees perform is within the scope of what DOL considers acceptable.
This being said, don't think that this new guidance from DOL means you can dramatically increase the time your tipped employees spend doing sidework and expect to use the tip credit for that time. The Wisconsin Department of Workforce Development's position is that up to 1/3 of an employee's time per shift can be spent in non tip-producing activities (this would be work related to the overall assignment of being a server, like preparing the dining room, folding napkins and making coffee). If more time than this is spent in non tip-producing activitie,s then the employer cannot pay the employee the tipped rate. The employee would have to receive at least the regular minimum wage rate per hour.