Professional Service Agreement

U.S. Department of Labor Loosens Restrictions on Calculating Minimum Wage Payments to Tipped Employees

December 17, 2018

The Wage and Hour Division of the United States Department of Labor has issued an Opinion Letter that rolled back its 80/20 Rule and reinstated a 2009 policy that provides businesses that employ tipped workers with greater flexibility to take tip credit for time that their employees engage in side work. The 80/20 Rule limited an employer's ability to take tip credit if an employee spent more than 20 percent of his or her time engaging in non-tip-generating jobs that were incidental to the employee's core job. The new guidance provides employers with relief from the demanding requirements under the now-withdrawn 80/20 Rule to adequately monitor and document employees' daily activities to comply with the FLSA's minimum wage and tip credit regulations. SESCO has a long history of ensuring that employers are compliant with federal and state wage and hour requirements. If employers have any questions or concerns about their pay practices, we recommend they contact us to ensure compliance.