DEPT. OF LABOR TO ELIMINATE 80/20 RULE UNDER THE FLSA

Back in October 2019, the Department of Labor (DOL) published a Notice of Proposed Rulemaking (NPRM) to eliminate the “80/20 Rule” under the Fair Labor Standards Act (FLSA).   The DOL will publish its Final Rule in early to mid-2020.

What is the “80/20” rule and why is it important to waiters/bartenders?

In short, the 80/20 Rule required employers to pay “tipped employees” the full minimum wage rate (currently $7.25/hour under federal law) — rather than the lower cash wage rate for tipped employees (i.e. $2.13/hour) if an employee spends more than 20% of his time performing “non-tipped” duties like:  cleaning the restaurant before the shift begins (or after it ends), setting up and cleaning tables, restocking condiments, rolling silverware, cleaning glasses, etc.    

For example, many restaurants require their servers to arrive to the restaurant an hour or more before their shift begins in order to set up and clean the restaurant.  They also require their servers to stay after their shift ends to clean up and prepare for the next day.  During these periods of time, the waiter is not serving customers and, therefore, is not earning tips.  Nevertheless, many employers pay the server $2.13/hour instead of the full minimum wage of $7.25/hour.   Under the 80/20 Rule, the employer would owe the servers the full minimum wage if these pre- and post-shift duties took more than 20% of their time.

What is the impact of the DOL’s elimination of the 80/20 Rule?

Under the New Rule, an employer will be able to pay its servers $2.13/hour for these duties — no matter how much time they take — so long as “an employee in a tipped occupation performs related, non-tipped duties contemporaneously with, or within a reasonable time before or after, his tipped duties.” A non-tipped duty will be considered related to a tip-producing occupation if the duty is listed as a task of the tip-producing occupation in the Occupational Information Network (O*NET). See: https://www.onetonline.org/link/details/35-3031.00

Obviously, this New Rule will permit restaurants to reduce their labor budgets significantly by paying its servers the reduced hourly rate. 

If your employer pays you less than the full minimum wage for your pre- and post-shift duties, contact us for more information and a free evaluation.