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.  This ruling upheld prior regulations from the Labor Department which stated 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 were 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.”

Trump’s Department of Labor Opinion Letter – the 20% Rule does not apply to “Duties relating to a Tip-Producing Occupation”

However, 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.

Under this new opinion letter, the DOL holds that the 80/20 rule does not apply to “duties that are related to a tip producing occupation”.  The DOL letter points to the following tasks listed for wait staff in the Occupational Information Network as duties related to a tip-producing occupation:

  • Take orders from patrons for food or beverages.
  • Check with customers to ensure that they are enjoying their meals and take action to correct any problems.
  • Check patrons’ identification to ensure that they meet minimum age requirements for consumption of alcoholic beverages.
  • Collect payments from customers.
  • Write patrons’ food orders on order slips, memorize orders, or enter orders into computers for transmittal to kitchen staff.
  • Prepare checks that itemize and total meal costs and sales taxes.
  • Present menus to patrons and answer questions about menu items, making recommendations upon request.
  • Remove dishes and glasses from tables or counters and take them to kitchen for cleaning.
  • Serve food or beverages to patrons and prepare or serve specialty dishes at tables as required.
  • Clean tables or counters after patrons have finished dining.
  • Prepare tables for meals, including setting up items such as linens, silverware, and glassware.
  • Explain how various menu items are prepared, describing ingredients and cooking methods.
  • Assist host or hostess by answering phones to take reservations or to-go orders, and by greeting, seating, and thanking guests.
  • Escort customers to their tables.
  • Perform cleaning duties, such as sweeping and mopping floors, vacuuming carpet, tidying up server station, taking out trash, or checking and cleaning bathroom.
  • Inform customers of daily specials.
  • Prepare hot, cold, and mixed drinks for patrons, and chill bottles of wine.
  • Roll silverware, set up food stations, or set up dining areas to prepare for the next shift or for large parties.
  • Stock service areas with supplies such as coffee, food, tableware, and linens.
  • Bring wine selections to tables with appropriate glasses and pour the wines for customers.
  • Fill salt, pepper, sugar, cream, condiment, and napkin containers.
  • Describe and recommend wines to customers.
  • Perform food preparation duties such as preparing salads, appetizers, and cold dishes, portioning desserts, and brewing coffee.
  • Provide guests with information about local areas, including giving directions.
  • Garnish and decorate dishes in preparation for serving.

No time limit is place on these duties if they are done immediately before, after, or during direct service to customers.  If the employee is required to do a duty not listed above, the employer would not be allowed to take a tip credit for the time spent doing that task. 

Why It Matters

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.

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 of the strict time limits imposed by the federal and state wage laws, procrastination can be costly…because time is money.