Tipped Workers Should Get Full Minimum Wage for Non-Tipped Worked

waitress serving banquet table  

According to the 9th Circuit (the federal appeals court for Alaska, Arizona, California, and Hawaii), the “80/20 rule” does apply – upholding the Labor Department regulations which state that employers may not reduce a tip-earning employee’s hourly pay below the minimum wage when that employee spends more than 20 percent of his or her workweek on non-tip-earning tasks. In other words, employers are not allowed to take tip credits for the time tipped employees spend doing non-tipped tasks.

Former servers and bartenders made similar claims in numerous cases, stating that they were treated as a tipped employee when they performed tasks unrelated to serving and bartending.

The Wage Law for Tipped Employees

The Fair Labor Standards Act – which establishes minimum wage and overtime pay rules – allows employers to pay as little as $2.13 per hour to tipped employees, but if the employees’ wages and tips combined do not meet the minimum wage (currently $7.25 an hour), the employer must make up the difference. The Court, however, agreed with the workers involved in these cases that their employers impermissibly paid them the tipped minimum for time they spent on untipped duties.

The Court’s Ruling – the 20% Rule for Non-Tipped Work

The opinion said the defendants’ current tip credit practice “effectively makes tips – intended as gifts to servers for their service – payments to employers” who use the tips to evade paying a proper minimum wage for non-tipped work. The opinion also points out that by having servers clean, bus tables, cut, and stock fruit and cook “employers can…eliminate or significantly reduce their need to hire full-time janitors and cooks, who—as non-tipped workers—are entitled to the full minimum hourly wage and therefore cost more to employ.”

As noted by one judge, federal tip credit rules state that a server is a “dual job employee” if his/her related tasks occupy more than 20% of her hours in a workweek” and clearly intend for “a server who performs unrelated tasks, such as cleaning restrooms” to be treated as a “dual job employee entitled to the full minimum hourly wage for his/her unrelated work.”

UPDATE: On November 8, 2018, the Trump Department of Labor (DOL) issued a new opinion letter reversing course regarding the amount of “non-tipped” work an employee can perform while still receiving a lower “tip-credit” wage. This new guidance essentially does away with the previous “80/20” rule regarding tipped employees.

Why It Matters

For many servers who spend up to half of their time doing non-tipped preparation and maintenance work like cleaning, taking inventory, and rolling silverware, not receiving at least the full minimum wage for those hours (even though with the tip credit, they still receive at least minimum wage for all hours worked) can make a meaningful difference in their pay.

As anyone who has worked in restaurants knows, wage and overtime pay abuses in the restaurant industry are common – depriving workers of their hard-earned pay.

Because of the strict time limits imposed by the federal and state wage laws, procrastination can be costly. If you have any doubts as to your entitlement to more pay for non-tipped work, contact the wage & hour law experts at The Lore Law Firm for a free and confidential review.

Call 1-866-559-0400 or submit your information using our convenient Case Evaluation form for a FREE and CONFIDENTIAL review of your circumstances. Because time is money.


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