The Tip Credit allows an employer to pay an employee an hourly wage of $2.13 if the employee earns at least $5.12 per hour in tips (ensuring the employee at least receives the $7.25 federal minimum hourly wage). To take advantage of the Tip Credit, your employee must be considered a “tipped” employee. The U.S. Department of Labor (“DOL”) considers any employee who receives tips totaling more than $30 in a month a “Tipped Employee.”

If any of your employees meet this definition, then you have a tipped employee. Before taking advantage of the Tip Credit, however, you must first comply with the DOL’s 80/20 Tipped Employees Rule.

What Is Now the Scope of the Tipped Employee Rule?

On December 28, 2021, the DOL restored the 80/20 Tipped Employees Rule as well as expanded its scope to limit side work to 30 consecutive minutes. This is commonly referred to as the 80/20 Rule.

Our firm has reviewed and analyzed the reinstated and expanded 80/20 Rule. Stay tuned for more critical information on this development.

In the meantime, don’t hesitate to reach out to our legal team if you have additional questions or need help complying with the expanded 80/20 Rule.