DOL Withdraws Tipped-Wage Rule

The U.S. Department of Labor (DOL) has withdrawn a rule relating to the payment of tipped employees under the Fair Labor Standards Act (FLSA). The U.S. Court of Appeals for the Fifth Circuit vacated the 2021 DOL rule in an August 2024 court decision.

The now vacated and withdrawn rule, which was known as the "80/20/30," "80/20," or "20%" rule, identified three categories of work:

• Tip-producing work serving customers for which employees receive tips;
• Directly supporting work that prepares for or otherwise assists tip-producing customer service work; and
• Work that is neither tip-producing nor directly supporting.

Employers had to pay employees the full minimum wage for any time that employees spent on work in the third category or that was neither producing nor directly supporting. Employers could pay employees for work done in the second category at a tip-credit rate, but only if the employees did not perform the work for a substantial amount of time.