New Tip Credit Rules – Give credit where credit is due

The Department of Labor’s (DOL) Wage and Hour Division recently published a Field Assistance Bulletin to notify employers that they have updated the Division’s Field Operations Handbook concerning a change to tipped employees in Dual Jobs.

Prior to November 8, 2018 the DOL Guidance stated that employers were prohibited from taking tip credit for work time if the employee spent more than 20% of that time performing non-tipped related duties during the workweek (referred to as the 80/20 Rule).

The DOL recognized that this was confusing for employers and they have rescinded the 20% rule so that now employers can apply tip credit to the time an employee performs tipped jobs even if that job includes some non-tipped tasks (such as washing a few dishes) during or immediately before or after performing tipped duties.

Under the revised guidelines, the DOL will use the following principles to determine if tip credit can be applied:

  • The duty must be a tip-related task (see below); and
  • The task must be performed immediately before or after, or while performing the tipped duties.
  • If the task is not considered to be tip-related the employer is not permitted to claim tip credit – however the DOL may determine the task is subject to the de minimis rule and may be considered non-compensable.

To determine tip-related tasks, the DOL will consult 29 CFR 531.56(e) and the Occupational Information Network (O*NET) – Summary Report for Waiters & Waitresses – Tasks/Details (to be tip-related the task must be listed under “category as “core” or “supplemental”).