Federal 80/20/30 Tip Credit Rule Update

September 17, 2024

On August 23, 2024, the Fifth Circuit Court of Appeals vacated the Department of Labor’s “80/20/30” tip credit rule nationwide. This rule previously required employers to pay tipped employees the full minimum wage (without a tip credit) if they spent more than 30 consecutive minutes or over 20% of their workweek on tip-supporting activities (e.g., bussing tables for a waiter).

Implications for Employers:

• Employers no longer need to differentiate between tip-producing and tip-supporting work or track time spent on such duties.
• Employers must still comply with state and local laws that may be more favorable to employees or prohibit tip credits.
• Tip credits cannot be applied for work unrelated to the tipped occupation (e.g., a waiter performing maintenance work).

The decision may be appealed by the DOL. We will provide updates on any significant developments.
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For more information, click here.