The U.S. Department of Labor withdrew three decades-old opinion letters on Monday outlining the application of the Fair Labor Standards Act to tipped employees performing “dual job” roles, stating the documents no longer reflect the agency’s interpretation of federal law.
DOL announced the rescission alongside a field assistance bulletin outlining its updated stance on the ability of employers, under the FLSA, to take a tip credit toward the federal minimum wage for employees who perform both tipped and nontipped work — also known as a dual job.
Employees in dual job roles may be paid the federal tipped minimum wage of $2.13 an hour only for time that they spend performing tipped work. For all other hours, such employees must be paid at least the full applicable minimum wage.
However, federal regulations also note that employees in a tipped occupation may perform duties related to that occupation that are not directed toward producing tips. For instance, a waitress may spend part of her time cleaning and setting tables or making coffee. But tipped employees remain engaged in their tipped occupation when performing such duties, and so, they need not be paid the full minimum wage while they perform them.
Successive presidential administrations have revisited tip regulations to clarify what amount of time employees in dual jobs must spend on tipped versus nontipped tasks. For several decades, DOL maintained the “80/20” rule, under which employers cannot take a tip credit for duties related to a tipped occupation if those duties exceed 20% of an employee’s working time.
The first Trump administration moved to drop the 80/20 rule via a 2018 opinion letter, followed by a 2020 final rule that intended to scrap the 80/20 standard altogether. The 2020 rule instead stated that employers may take a tip credit for all nontipped duties that an employee performs so long as those duties are related to the employee’s tipped occupation and the employee performs them contemporaneously with, or within a reasonable time immediately before or after, tip-producing activities.
Then came the reversal by the Biden administration, which ditched the 2020 final rule and went on to issue its own rule reinstating the 80/20 regulation. The 5th U.S. Circuit Court of Appeals vacated the Biden-era rule in 2024, holding that it was inconsistent with the FLSA’s text.
On Monday, DOL said that the three rescinded opinion letters, which were published in 1979, 1980, and 1985, had the potential to be “misread,” noting that the Biden administration’s final rule cited the letters as part of its justification for reviving the 80/20 standard.
Instead, the agency said it would focus its regulatory attention on whether a tipped employee performs duties related to their tipped occupation without imposing a percentage-based limit on time spent performing related nontipped duties.
In July, the agency published a regulatory agenda showing it had begun the process of issuing a new proposal addressing tip credits for dual job workers under the FLSA. The agency confirmed those plans on Monday, adding that it would welcome comments on the proposal once it is published.