2021 Dual Jobs Final Rule for Tip Credits: DOL Guidance, Reinstated 80/20 Rule, Revised 30-Minute Definitions

Description

The new Dual Jobs Final Rule, which was published in the Federal Register on Oct. 29, 2021, and became effective Dec. 28, 2021, essentially matches the notice of proposed rulemaking (NPRM) published in June 2021. Although the DOL acknowledged the pandemic's impact on the restaurant, hospitality, and service industries, the final rule likely will exacerbate challenges in higher costs and administrative headaches for employers in these sectors.

The final rule differs from the NPRM in that it (1) clarifies its definition of "tip-producing work" as encompassing "any work performed by a tipped employee that provides service to customers for which the tipped employee receives tips" and provides more examples illustrating the scope of tip-producing work, (2) amends the definition of "directly supporting work" as preparation of, or otherwise assisting, the service work that produces tips, (3) modifies the definition of work that is not part of the tipped occupation, and (4) clarifies the 80/20 calculation and the 30-minute rule.

The Dual Jobs final rule states that an employee performs work directly in support of tip-producing work for a substantial amount of time if the tipped employee's directly supporting work either (1) exceeds a "20 percent workweek tolerance" or (2) exceeds 30 minutes for any continuous period.

Employers should remember that many states and localities have their own rules regarding tip credits, and the Fair Labor Standards Act does not trump or preempt more protective state and local laws. Some states have different versions of the 80/20 rule, and some apply their 80/20 rule on a daily rather than weekly basis. Additionally, some jurisdictions do not allow employers to take a tip credit. Some have a higher sub-minimum wage for tipped employees or a higher minimum wage for non-tipped work.

Listen as our distinguished panel assists employment attorneys in interpreting the current DOL tip credit guidance. The panel will specifically discuss what types of non-tip generating work impacts whether tip credit applies and best practices for hospitality employers in tracking and calculating wages owed to tipped employees.