On November 8, the U.S. Department of Labor (DOL) issued an opinion letter retracting the 80/20 rule, the Fair Labor Standards Act (FLSA) tip credit provision stating that when a tipped employee spends more than 20% of the workweek on nontipped tasks, the employer may not take a tip credit for the untipped time worked. The opinion letter (actually a reissued 2009 opinion letter) stated that for purposes of allocating the tip credit, no limitation shall be placed on the amount of duties that an employee may perform related to his or her tip-producing occupation, whether or not the duties involve direct customer service, “as long as they are performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.” Employers are referred to the Occupational Information Network (O*NET) for a listing of tip-producing occupations and their core duties. To read the full text of the opinion letter, see FLSA2018-27 Dual jobs and related duties under section 3(m)
The DOL’s position on the 80/20 rule has gone back and forth over the last decade as well as in the courts. As recently as September 18, an en banc decision by the Ninth Circuit Court of Appeals reversed a prior panel position and held that courts should defer to DOL guidance – which, at the time, upheld the 80/20 rule. While such shifts are to be expected with any change in administration or agency leadership, the political dynamic resulting from the mid-term elections is likely to create more fluctuation as well as introduce new legislation.
UPDATE: The DOL published the Field Assistance Bulletin (FAB) No. 2019-2 (February 15, 2019) regarding Dual Jobs and Related Duties under the Fair Labor Standards Acts (FLSA), providing guidance consistent with opinion letter 2018-27 referenced above. Its Field Operations Handbook has also been updated accordingly.
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