March 28, 2024
The 80/20 rule

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Update

The 80/20 rule

Jason Garcia | 2/27/2019

Siding with restaurants over waiters and bartenders, the Trump administration has revoked a federal policy meant to prevent employers from paying a sub-minimum wage to tipped workers who spend much of their time on tasks that aren’t directly related to earning tips. 

In a recent opinion letter, the U.S. Department of Labor advises employers that they do not need to abide by what’s become known in the hospitality industry as the “80/20” rule. That rule said that employers had to pay tipped workers the full minimum wage – rather than the lower tip credit wage they usually pay – for time spent doing so-called “sidework” when the employee spends more than 20 percent of her or his time on those ancillary tasks.

For waiters, one of the largest categories of tipped workers, sidework includes duties like rolling silverware, cleaning coolers, handing out fliers, setting up banquets, preparing salads, slicing bread and brewing coffee. 

Restaurants have complained for years about the 80/20 rule, which is contained in an internal Department of Labor field manual. They argue that there is nothing in either federal law nor formal agency rule to support it and that it is a compliance nightmare that would require them to track the minute-by-minute movements of their staffs. 

The Trump administration disavowed the 80/20 rule just two months after a federal appellate court upheld it and said employees could sue employers who violated it. The Obama administration had filed a legal brief supporting the plaintiffs in that case, which included former waiters and bartenders at chains such as J. Alexander’s, Denny’s, IHOP, P.F. Chang’s and AMC Theaters, among others. 

It’s not bulletproof protection for restaurants and employers. In January, a federal judge in Missouri rejected an attempt by a Buffalo Wild Wings franchisee to decertify a class action suit invoking the 80/20 rule by citing the Trump administration’s letter. 

“The abrupt issuance of an Opinion Letter purporting to change the DOL’s interpretation after years of consistently construing the Dual Jobs Regulation as limited by the 80/20 rule does not persuade this Court to apply a new interpretation to this litigation,” wrote Judge Stephen Bough, an Obama appointee on the federal bench for the Western District of Missouri.   

Still, Kevin Johnson, a shareholder at the Tampa employment-defense firm Johnson Jackson, says the Trump administration’s move does put employers on firmer legal footing as they defend themselves against 80/20 claims. 

“The significance of the letter is it gives employers the ability to argue that the last seven or eight years of case law and attempts to divide up occupations into tipped and non-tipped tasks have all been misguided,” says Johnson, whose clients have included Bloomin’ Brands’ Outback Steakhouse. “It’s just a very volatile area of law right now.” 

For more on the debate around the 80/20 rule – and where it stands in Florida – see “Tipping Point: When should waiters be paid the minimum wage?” from the December 2018 issue of Florida Trend. 

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