When we talk to our restaurant clients, one of their biggest
concerns is the uncertainty regarding the tip credit rules. On
October 28, 2021, the U.S. Department of Labor issued a final rule
reinstating the “80/20 Rule” with modifications. The
final rule becomes effective December 28, 2021.
Under the final rule, a tipped employee's work duties will
fall into three categories: (1) tip-producing work; (2) directly
supporting tip-producing work; and (3) work that is not part of a
tipped occupation.
Under the first category, work is tip-producing, and therefore,
taking the tip credit for this time is permissible. Under the
second category, work is “directly supporting” if it is
performed in preparation of or to otherwise assist tip-producing
customer service work. For work that falls under the second
category, an employer may take a tip credit if the employee's
work “is not performed for a substantial amount of
time.” A “substantial amount of time” is defined
as: (1)
