Insurica
Pay Now
Client Login

The U.S. Department of Labor (DOL) recently withdrew a 2021 tipped-wage rule vacated by a federal appeals court in August 2024, officially reinstating the pre-2021 regulation for tipped employees under the Fair Labor Standards Act (FLSA).

The Now-Withdrawn “80/20/30” Rule

The vacated “80/20/30 rule” outlined three work categories for tipped employees:

  1. Tip-producing work providing direct service to customers
  2. “Directly supporting” preparatory or assistive work
  3. Non-tipped work unrelated to customer service

Non-tipped duties (category 3) had to be compensated at the full federal minimum wage. Category 2 work could be paid the tipped rate if performed for less than 30 consecutive minutes or 20% of the total workweek hours. This rule contradicted long-standing DOL guidance and was challenged by business groups.

Legal Dispute

The 80/20/30 rule, adopted under the Biden administration, was contested by the Restaurant Law Center and Texas Restaurant Association. A district court upheld the rule, but the 5th Circuit Court of Appeals vacated it in August 2024, leading to the DOL’s formal withdrawal in December.

Implications for Employers

With the rule nullified, employers of tipped staff have more flexibility in assigning duties without losing tip credit eligibility. However, some state or local jurisdictions may still embrace similar time-based limitations on non-tipped work.

For additional Employee Benefits resouces, contact INSURICA today.

Copyright © 2025 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. 

About the Author

INSURICA
INSURICA

Share This Story

Stay Updated

Subscribe to the INSURICA blog and receive the latest news direct to your inbox.

Subscribe to the blog

Related Blogs

Workers’ Compensation Rates Drop, Yet Premiums Remain Unchanged

April 29th, 2025|Blog, Construction, Trending|

In Workers' Compensation, the reality is that the E-Mod score determines the majority of the annual premium, rather than the non-disputable rates assigned by the NCCI for each class code. Which is to the benefit of savvy companies that understand how the EMOD score works and know how to control it.

Spring Storm Safety Tips for Businesses

April 28th, 2025|Blog, Risk Management, Trending|

Spring can bring about some of the year’s most dangerous weather and wreak havoc on many aspects of a company’s operations. This article discusses the weather threats to watch out for during spring and measures businesses can take to minimize damage.

Green Practices in Healthcare Facilities

April 27th, 2025|Blog, Healthcare, Trending|

Sustainability has become increasingly important for healthcare facilities. Faced with regulatory requirements, cost-saving opportunities and growing public expectations for environmental responsibility, healthcare facilities are pursuing green initiatives that align with operational efficiency and risk management goals.

Go to Top