DOL withdraws opinion letters related to ‘80/20’ rule for tipped employees

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The Department of Labor (DOL) recently moved away from longstanding guidance for employers that claim tip credits under the Fair Labor Standards Act (FLSA).

That guidance, known as “80/20,” stated that employers can’t take tip credits if their employees spend more than 20% of their time on duties for which they don’t receive tips, such as cleaning or setting tables. The guidance was codified in a rule issued by President Joe Biden’s administration in 2020, but that regulation was vacated by a federal appeals court in 2024.

The DOL withdrew three opinion letters dating back to the late 1970s and 1980s that formed the basis for the 80/20 guidance, per an Oct. 19 field assistance bulletin from Andrew Rogers, administrator for the agency’s Wage and Hour Division. Rogers noted that the 80/20 guidance was removed from DOL’s Field Operations Handbook in January 2025 in light of the Biden-era rule being invalidated.

He also noted that the DOL plans to issue a proposed rule “to amend various regulations for tipped employees under the FLSA,” per its most recent regulatory agenda.

What this means for employers with tipped workers. The DOL’s move upholds a more employer-friendly standard with regard to businesses’ treatment of tipped employees.

In light of this guidance and previous actions by the Trump administration to move away from the 80/20 rule, employers no longer have to track the amount of time employees spend on non-tipped duties for FLSA compliance.

That said, the FLSA’s “dual jobs” regulation—which states that employers can only take a tip credit for hours that workers spend in tipped occupations—still holds. That means if an employee works as both a hotel maintenance worker and a waiter, for example, they must receive the full minimum wage for the non-tipped occupation, Mark Fijman, an employer-side attorney for the law firm Phelps, wrote in a blog post.

Employers should also take note of any state laws affecting their workforces that would supersede this federal guidance. States such as New Jersey, New York, and Colorado, for example, still require businesses to track workers’ time spent on non-tipped duties, and restrict employers’ ability to claim tip credits when these duties exceed 20% of their time.