Final Labor Department Rule on Tipped Employees

The U.S. Department of Labor has just reinstated a longstanding policy, revoked late in the Trump administration, requiring restaurants and other businesses to pay tipped employees a higher minimum wage when performing work that does not directly generate gratuities.

The final rule states that when tipped employees, such as servers and bartenders, spend at least 20% of their workweek on duties that support their occupation but do not directly produce tips, they are entitled to the full Federal minimum wage of $7.25 an hour for that work, rather than the pay floor of $2.13 that is for workers who regularly earn tips.  When it was previously in effect, that was known as the “80/20” rule.

This new rule, which takes effect on December 28th, adds a new twist: tipped employees will be owed the full minimum wage when fulfilling side tasks (i.e. rolling silverware into napkins, cleaning work stations etc.) for at least 30 consecutive minutes, regardless of weekly hours.

The Restaurant Industry may still pursue litigation to challenge this new rule.

E. Fredrick Preis, Jr
Senior Partner
BREAZEALE, SACHSE & WILSON, L.L.P.
Labor & Employment Law Section