The 80/20 rule for tipped employees is no longer in effect. A federal appeals court vacated the Department of Labor’s 80/20/30 rule in 2024, and the DOL formally removed it from the Code of Federal Regulations that December.1Federal Register. Tip Regulations Under the Fair Labor Standards Act (FLSA) – Restoration of Regulatory Language There is currently no federal cap saying that side work cannot exceed 20 percent of a tipped employee’s weekly hours, and no 30-minute continuous limit on individual stretches of side work. What still applies is the older “dual jobs” standard: the tip credit covers all work performed within a tipped occupation, and employers owe the full minimum wage only when a tipped employee is put to work in a separate, non-tipped occupation.
How the Tip Credit Works
Under the Fair Labor Standards Act, an employer can pay a tipped employee a direct cash wage as low as $2.13 per hour, so long as the employee’s tips bring total pay up to at least the federal minimum wage of $7.25 per hour.2U.S. Department of Labor. Tips The $5.12 gap between those two figures is the tip credit. If tips fall short in a given workweek, the employer has to make up the difference.3eCFR. 29 CFR Part 531 Subpart D – Tipped Employees
The tip credit only applies while a tipped employee is actually working in a tipped occupation. That principle predates the 80/20/30 rule by decades and survived its repeal. Employers cannot use the lower cash wage for hours spent outside the tipped role, no matter which side-work regulation is on the books at any given time.
What the 80/20/30 Rule Required
The Department of Labor finalized the 80/20/30 rule in 2021, and it took effect December 28 of that year. It sorted a tipped worker’s duties into three categories and imposed hard time limits on two of them.4GovInfo. 29 CFR 531.56 – Wage and Hour Division, Labor
Tip-producing work meant tasks that directly generated tips: taking orders, serving food, mixing drinks, tableside service. Directly supporting work meant tasks that assisted tip-producing service without generating tips on their own, such as rolling silverware, refilling condiments, wiping down tables, brewing coffee, stocking a bar, or slicing garnishes. Work that fell outside the tipped occupation entirely, like cleaning bathrooms, mopping kitchen floors, or handling maintenance, was never eligible for the tip credit at all.
On top of those categories, the rule set two limits on directly supporting work. Time spent on it could not exceed 20 percent of the hours for which the employer claimed a tip credit in a given workweek. For a 40-hour employee, that was eight hours of side work at the tipped rate; anything more had to be paid at $7.25. Separately, any continuous stretch of directly supporting work longer than 30 minutes triggered the full minimum wage for every minute past the 30-minute mark, even when the weekly 20 percent cap had not been reached.4GovInfo. 29 CFR 531.56 – Wage and Hour Division, Labor If the employee paused to serve a customer, the 30-minute clock restarted.
The framework covered all tipped occupations, not just restaurants: bellhops, valets, and hair stylists were subject to the same three buckets.
Why the Rule Was Struck Down
In October 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the 80/20/30 rule in Restaurant Law Center v. U.S. Department of Labor. The court found the rule inconsistent with the text of the FLSA and arbitrary and capricious under administrative law standards. Its central point was that the statute focuses on an employee’s occupation, not on individual tasks within that occupation, and that breaking a single tipped occupation into task categories with rigid time limits went beyond what Congress authorized. The Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, which cut back judicial deference to agency rulemaking, factored into the Fifth Circuit’s reasoning.1Federal Register. Tip Regulations Under the Fair Labor Standards Act (FLSA) – Restoration of Regulatory Language
In December 2024, the DOL published a final rule restoring the regulatory text at 29 CFR 531.56 to the version that existed before the 2021 changes, in line with the court’s mandate.1Federal Register. Tip Regulations Under the Fair Labor Standards Act (FLSA) – Restoration of Regulatory Language
The Rule That Applies Now
With the 80/20/30 rule gone, the reinstated regulation uses the older dual jobs framework that dates back to 1967. The question is simply whether the employee is working in a tipped occupation or a non-tipped occupation.3eCFR. 29 CFR Part 531 Subpart D – Tipped Employees When an employee who customarily receives tips is performing work in that tipped role, the employer can claim the tip credit for those hours. When the same employee is performing work in a completely different occupation for the same employer, the tip credit does not apply.
The practical difference from the vacated rule is significant. There is no bright-line 20 percent weekly cap. There is no 30-minute continuous ceiling. A server who spends 45 uninterrupted minutes rolling silverware and pre-setting tables before a shift is still working in the tipped occupation, and the tip credit applies to all of that time. Under the 2021 rule, the last 15 minutes would have required the full $7.25.
Where the Line Still Falls
The dual jobs standard has teeth in one direction: an employer cannot use the lower tipped wage to cover hours worked in a genuinely separate role. A server who gets pulled off the floor to spend an entire shift painting the restaurant’s fence is doing a different job during those hours. A bellhop reassigned to facility maintenance is not working in a tipped occupation while doing that work. In both cases the full minimum wage is owed and the tip credit cannot be used. That protection did not go away when the 80/20/30 rule fell.
Most disputes going forward will center on this line. Employers now have more room for routine side work like stocking, prep, and cleanup within the tipped occupation, but they still cannot staff a separate job function with tipped employees at $2.13 an hour. The workable question is whether the tasks are the kind that a person in that tipped role customarily performs, or whether the employee has effectively been shifted into a different job.
States Where the Federal Rule Does Not Control
About seven states prohibit tip credits entirely and require employers to pay the full state minimum wage before tips. Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington fall into this group. In those states, the whole 80/20 debate is largely beside the point for base pay, because there is no reduced tipped wage rate to begin with. Tipped employees receive the full state minimum plus their tips.
Many other states allow a tip credit but set the direct cash wage higher than $2.13 or impose their own side-work standards at the state level. When federal and state rules differ, the standard more favorable to the employee controls. Workers in states with their own tipped-employee regulations should check state law before assuming the federal dual jobs framework is the whole picture.
What to Track If You Suspect Misuse
Without the 80/20/30 rule’s specific numbers, employees who believe they are being paid the tipped wage for work outside their tipped occupation should keep contemporaneous notes: dates, hours, and the actual tasks performed. Employers are required to preserve payroll records for at least three years and supplementary time records for at least two.5eCFR. 29 CFR 516.5 – Records to Be Preserved 3 Years6eCFR. 29 CFR Part 516 – Records to Be Kept by Employers When employer records are incomplete or missing, courts routinely credit the employee’s reasonable estimate of hours worked. Point-of-sale job codes and personal logs both help establish what work was actually being done during the disputed hours.
The FLSA statute of limitations is two years from the date of the violation, or three years if the violation was willful. Employees who prevail on a minimum wage claim can recover the unpaid wages plus an equal amount in liquidated damages, so the default recovery is double the underpayment.7Office of the Law Revision Counsel. 29 USC 216 – Penalties A court can reduce the liquidated damages only if the employer shows both good faith and reasonable grounds for believing it was following the law.8Office of the Law Revision Counsel. 29 USC 260 – Liquidated Damages