Dual jobs and the 2020 tip Final Rule

On Behalf of | Jul 23, 2021 | Fair Labor Standards Act (FLSA) |

In 2020, the Department of Labor issued a Final Rule addressing who may share tips under the Fair Labor Standards Act and when an employer may take the tip credit. One issue that has proven difficult, however, is how the Final Rule addresses dual job employees.

Dual jobs

In the context of tips received as part of an employee’s wages, dual jobs refers to a tipped worker who also performs some duties which are non-tipped. For decades, what’s known as the 80/20 rule has governed situations involving dual jobs. The rule required employers to pay tipped employees full minimum wage for any time in which the employee spent more than 20% of their time performing non-tip generating duties.

The Final Rule

In December 2020, the Department of Labor issued its Final Rule, which intended to do away with the 80/20 rule entirely. It would be replaced with a standard based upon reasonable time, rather than stark percentages. An employer could take a tip credit for any amount of related, non-tipped work done by an employee if the work was performed within a reasonable time before or after their tipped duties.

Dual jobs rule currently in limbo

Following issuance of the Final Rule, the Department’s new rule on dual jobs received a great deal of criticism. Implementation of this specific provision has been delayed multiple times. It is currently delayed yet again, as the Department of Labor considers utilizing a modified version of the older 80/20 rule to clarify the FLSA.

The language to be used is under consideration, with the Department presently accepting commentary from businesses and other interested parties in an attempt to form a consensus.

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