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What is The 80/20 Rule for Tipped Employees and Important Upcoming Changes to The Rule

By September 10, 2020 No Comments

The Fair Labor Standards Act (FLSA), a federal law that regulates employees’ wages, requires generally that employers pay employees at least the Federal minimum wage per hour. Section 3(m) of the FLSA allows an employer that meets certain requirements to count a limited amount of the tips its “tipped employees” receive as a credit toward the employer’s Federal minimum wage obligation. This is why restaurants can pay servers less than the minimum wage without violating the law.

Now, not all the work a restaurant employee does is from “tipped work.” Waiters and waitresses usually do way more than serve tables. Thus, in order to determine whether an employee is eligible to be a “tipped worker,” and therefore be paid than the minimum wage, courts used what is called the 80/20 rule. The 80/20 rule says essentially that employers cannot pay employees at the “tipped worker” rate if their tasks take up 20% or more of their shifts. In other words. If you are serving tables 20% of your shift and answering the phone the other 80% of your time, you are supposed to be paid at least the regular minimum wage—not the reduced tip worker rate which under federal law is currently $2.13 an hour.

Under the new proposed rule, employers will be able to pay workers at the lower rate for unlimited amounts of non-tipped work, like cleaning tables or answering calls, as long as it’s “performed contemporaneously with, or for a reasonable time immediately before or after, tipped duties.”

The proposed change is drastic, because it gives a lot of leeway to employers to characterize what “contemporaneous” is in the context of a job. Moreover, many server jobs include a variety of collateral duties like folding napkins, cleaning tables, packing and running food, collecting money and others. The new rule will make it very easy for employers to mix it all up in a way that, at the end of the day, the employee falls in the tipped category (at $2.13) rather than non-tipped category (at $7.25).

For more information about the FLSA or any wage/employee issue email attorney Eduardo A. Maura at eayala@ayalalawpa.com or text or call at 305-570-2208.

 

 

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