DOL withdraws contentious 80/20 tip credit guidance

Dive Brief:

In an opinion letter published yesterday, the Department of Labor (DOL) withdrew its 80/20 guidance regarding tipped and non-tipped duties. According to legal experts, the move likely means the end of class and collective action lawsuits currently pending in court that were predicated on the prior enforcement policy and will make future such actions harder.
DOL republished a letter that had been withdrawn "for further consideration" back in 2009. The guidance states that employers may take a tip credit for an employee's work so long as the employee's tasks are on the O*NET task list for that tipped job — a broad qualifier that encompasses most work a tipped employee in a restaurant would do while on the job, Paul DeCamp, co-chair of Epstein Becker Green's Wage and Hour Practice group and former administrator of the DOL Wage and Hour division, told HR Dive in an email.
The 80/20 guidance established that employers could not take a tip credit for duties relating to the tipped occupation if those duties exceeded 20% of the employee's working time; the guidance was established in an attempt to prevent employers from having tipped employees do a myriad of non-tipped work. Employer groups opposed the guidance, saying it created undue tracking burdens for employer and employee alike.

Dive Insight:

The withdrawal of the 80/20 guidance is largely considered good news for employers, simplifying wage and hour tracking for restaurants and ending "segregation of tasks based on job title," DeCamp said. The reissuing of the 2009 opinion letter will also render invalid a number of decisions at the appeals court level that gave deference to the Obama-era standard, principals Jeffrey W. Brecher and Eric Magnus wrote for Jackson Lewis.

"Going forward, plaintiffs who try to assert a claim under the new opinion letter will have a much tougher time pleading a claim, and any such claim will likely be too individualized to support a class or collective action, resulting in a small and manageable single-plaintiff minimum wage case," DeCamp said.

This letter is yet another example of the Trump DOL's intent to return to what many employers consider "common sense" regulation after the Obama administration made a slew of employee-friendly changes. Deregulation, generally, remains a priority for DOL, Secretary Alexander Acosta told attendees at a recent U.S. Chamber of Commerce event.