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DOL Proposes to Formalize the 80/20 Rule for Tipped Employees

On June 21, 2021, the Department of Labor began the notice-and comment process for a proposed regulation to formalize the 80/20 rule for tipped employees. 

Basically, an employer may take a tip credit for a tipped employee (i.e., pay $2.13 per hour) as long as the employee performs tipped duties and makes at least minimum wage when tips are taken into account.  Per the 80/20 rule, if a tipped employee performs non-tipped duties (e.g., rolling silverware, washing dishes, filling condiment containers, and other side work) for 20 percent of the hours worked or a continuous 30 minutes, the employee must be paid at least the standard minimum wage.   

On June 21, 2021, the Department of Labor (DOL) proposed a new rule to restrict the amount of non-tip-producing work a tipped employee can perform when an employer is taking a tip credit.


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