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The Department of Labor Issues New Guidance for Tipped Employees

Last week the United States Department of Labor (DOL) issued an updated provision to its Field Operations Handbook (FOH) regarding whether tipped employees are working “dual jobs.”  The changes to section 30d00(f) of the FOH essentially redact the DOL’s “80/20 Rule.” This change was anticipated after the DOL issued an opinion letter on November 8, 2018, calling the rule unworkable. The 80/20 Rule disallowed employers from taking the tip credit if a tipped employee spent 20% or more of their time performing non-tipped related duties in conjunction with their tip producing duties.

The updated FOH guidance does not set a percentage limitation on the amount of non-tip producing duties that a tipped employee can perform so long as the duties 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.” Additionally, the guidance instructs DOL investigators to consult the Occupational Information Network (O*NET) to determine whether duties are “related or unrelated to the tip-producing occupation.” If a job duty is listed as “core” or “supplemental” under the “tasks” section of a tip-producing occupation on O*NET, it will be considered “related to the tipped occupation.” 

For example, one “core” task under O*NET’s description for “waiters and waitresses” is cleaning tables and counters after patrons have finished dining. According to the new guidance, employers may take a tip credit for any amount of time a waiter or waitress, who is a tipped employee, spends performing these duties. For occupations without an O*NET description, the new guidance requires a comparison between that occupation’s job duties and job duties of similar occupations that do have O*NET descriptions. 

This updated guidance provides a much more workable application of FLSA regulations for employers who employ tipped employees. If you have questions about the DOL’s updated FOH on whether tipped employees are working dual jobs, feel free to contact one of our wage and hour attorneys by calling (501) 371-9999.