The U.S. Division of Labor (DOL) not too long ago withdrew a 2021 tipped-wage rule vacated by a federal appeals courtroom in August 2024, formally reinstating the pre-2021 regulation for tipped workers underneath the Fair Labor Standards Act (FLSA).
The Now-Withdrawn “80/20/30” Rule
The vacated “80/20/30 rule” outlined three work classes for tipped workers:
- Tip-producing work offering direct service to clients
- “Straight supporting” preparatory or assistive work
- Non-tipped work unrelated to customer support
Non-tipped duties (class 3) needed to be compensated on the full federal minimal wage. Class 2 work might be paid the tipped charge if carried out for lower than 30 consecutive minutes or 20% of the overall workweek hours. This rule contradicted long-standing DOL steerage and was challenged by enterprise teams.
Authorized Dispute
The 80/20/30 rule, adopted underneath the Biden administration, was contested by the Restaurant Regulation Middle and Texas Restaurant Affiliation. A district courtroom upheld the rule, however the fifth Circuit Court docket of Appeals vacated it in August 2024, resulting in the DOL’s formal withdrawal in December.
Implications for Employers
With the rule nullified, employers of tipped employees have extra flexibility in assigning duties with out dropping tip credit score eligibility. Nevertheless, some state or native jurisdictions should still embrace related time-based limitations on non-tipped work.
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