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Labor Department makes ‘80/20’ switch official

Wage and Hour Division will no longer prohibit tipped wage for side work

Ron Ruggless, Senior Editor

February 16, 2019

2 Min Read
Labor Department makes ‘80/20’ switch official
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The U.S. Department of Labor on Friday issued an update bulletin that rescinded prior guidance known as the “80/20 rule,” which since 2009 had prohibited employers from using the subminimum wage for non-tipped side work.

Friday’s update to the Field Operations Handbook followed the Labor Department’s November announcement that it was essentially eliminating an Obama-era “dual jobs” interpretation known as the “80/20 rule,” which said tipped employees who spent more than 20 percent of working hours on non-tipped duties — like setting tables, rolling silverware or prepping salads — could not be paid the subminimum wage for that time.

The handbook update said Department of Labor’s Wage and Hour Division “will no longer prohibit an employer from taking a tip credit based on the amount of time an employee spends performing duties related to a tip-producing occupation that are performed contemporaneously with direct customer-service duties or for a reasonable time immediately before or after performing such direct-service duties.”

The update is confirmation of Department of Labor guidance issued in November, said Roy Salins, a labor attorney and partner in law firm Davis Wright Tremaine in New York, in an interview.

Salins warned that many employers, such as those in New York where he practices, would still be subject to 80/20 laws if they had been enacted at the state level.

New York’s hospitality wage order is almost a decade old, he said. It has an 80/20 rule that is even stricter than former Labor Department standard, forbidding employers from using the tip credit for an entire shift if a worker performs non-tipped tasks more than 20 percent of the time.

“Before any operator takes a tip credit, they should check with counsel,” Salins advised, especially regarding state or local laws that might provide something similar to the 80-20 rule.

In addition, he said large restaurant companies with operations in a number of states might consider whether it best to have a compensation structure that accommodates all jurisdictions rather than a patchwork version for various state requirements.

Also, Salins said the 80/20 rule update could change with subsequent administrations.

“While these Wage and Hour opinion letters and bulletins could be helpful for a defense,” Salins advised. “If there is a new administration in two years, they could just switch it back.”

Contact Ron Ruggless at [email protected] 

Follow him on Twitter: @RonRuggless

About the Author

Ron Ruggless

Senior Editor, Nation’s Restaurant News / Restaurant Hospitality

Ron Ruggless serves as a senior editor for Informa Connect’s Nation’s Restaurant News (NRN.com) and Restaurant Hospitality (Restaurant-Hospitality.com) online and print platforms. He joined NRN in 1992 after working 10 years in various roles at the Dallas Times Herald newspaper, including restaurant critic, assistant business editor, food editor and lifestyle editor. He also edited several printings of the Zagat Dining Guide for Dallas-Fort Worth, and his articles and photographs have appeared in Food & Wine, Food Network and Self magazines. 

Ron Ruggless’ areas of expertise include foodservice mergers, acquisitions, operations, supply chain, research and development and marketing. 

Ron Ruggless is a frequent moderator and panelist at industry events ranging from the Multi-Unit Foodservice Operators (MUFSO) conference to RestaurantSpaces, the Council of Hospitality and Restaurant Trainers, the National Restaurant Association’s Marketing Executives Group, local restaurant associations and the Horeca Professional Expo in Madrid, Spain.

Ron Ruggless’ experience:

Regional and Senior Editor, Informa Connect’s Nation’s Restaurant News and Restaurant Hospitality (1992 to present)

Features Editor – Dallas Times Herald (1989-1991)

Restaurant Critic and Food Editor – Dallas Times Herald (1987-1988)

Editing Roles – Dallas Times Herald (1982-1987)

Editing Roles – Charlotte (N.C.) Observer (1980-1982)

Editing Roles – Omaha (Neb.) World-Herald (1978-1980)

Email: [email protected]

Social media:

Twitter@RonRuggless

LinkedIn: www.linkedin.com/in/ronruggless

Instagram: @RonRuggless

TikTok: @RonRuggless

 

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