The 5th U.S. Circuit Court of Appeals has vacated a U.S. Department of Labor (DOL) rule that regulated the payment of tipped employees under the Fair Labor Standards Act (FLSA). The court determined the rule did not align with the language of the FLSA. We’ve gathered articles on the news from SHRM Online and other outlets.

80/20/30 Rule

The vacated rule, called the 80/20/30 rule, identified three categories of work:

• Tip-producing work that provides service to customers for which tipped employees receive tips.
• Directly supporting work performed in preparation of or to otherwise assist tip-producing customer service work.
• Work that is not part of the tipped occupation and that is neither tip-producing nor directly supporting.

Under the rule, any time spent in the third category had to be compensated at full minimum wage—that is, no tip credit could be taken. Time spent in the second category could be paid at a tip credit rate, but only if the work was not performed for a substantial amount of time. Substantial time was defined as either more than 30 continuous minutes or more than 20% of the hours in the workweek for which the employer had taken a tip credit.

The 5th Circuit’s decision signals the end of the 80/20/30 rule that took effect in December 2021. Employee-side lawyers may assert that the 1988 version of the 80/20 rule remains in place outside the 5th Circuit, which covers Louisiana, Mississippi, and Texas. However, there may be further legal challenges of that...

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