In October of 2021, the Department of Labor released new tip credit regulations (also referred to as the “dual jobs” or “80/20”) that govern pay for tipped employees of restaurants. This new regulation became effective on December 28th.
In November, the National Restaurant Association’s Restaurant Law Center and the Texas Restaurant Association filed an emergency lawsuit in a Texas federal court challenging the rules and asking for an immediate injunction while the case is being considered. The lawsuit is based on the premise that the Labor Department has exceeded its authority in releasing these rules, and that the impact of the rules will be a definite net-negative for the restaurant industry.
The new tip credit regulations devise three different categories of work, which impact the wage a restaurant can pay a tipped employee: “tip-producing work”, “directly supporting work”, and work that is “not part of the tipped occupation”. Importantly, under the new tip credit regulations, restaurants cannot take a tip credit for the time spent on tasks considered “directly supporting work” that exceeds 20% of the workweek or 30 continuous minutes.
Keep in mind, time spent in the second category of directly supporting duties, employees may not spend a “substantial amount of time” completing these tasks. This is defined as either (1) more than 30 continuous minutes, or (2) more than 20% of the hours in the workweek for which tip credit is taken.
At this time, it is important for restaurants to continue to take steps to comply with the new tip credit regulations. Actions to consider taking include conducting an audit of the job duties performed by your tipped employees, training your managers on the new requirements, implementing new policies and procedures on side work, changing your staffing model to hire new staff to perform side work tasks, and adopting new timekeeping protocols for tipped employees.
The National Restaurant Association will present a webinar in early January on the substance of the new regulations and take questions on best practices for compliance. Stay tuned for more details.