On August 23, 2024, The United States Court of Appeals for the Fifth Circuit issued a unanimous published opinion declaring that the Department of Labor’s 2021 80/20/30 regulation concerning tipped employees is contrary to the text of the Fair Labor Standards Act as well as being arbitrary and capricious. 

The court reversed the district court’s denial of Epstein Becker Green’s (EBG's) summary judgment motion and grant of the Department of Labor’s summary judgment motion, and it vacated the regulation. EBG brought the suit in the U.S. District Court for the Western District of Texas, asking the court to set aside the Final Rule under the Administrative Procedure Act (APA) as not in accordance with the law.

This ruling represents what appears to be the first federal appellate ruling addressing the validity of a federal regulation following the Supreme Court’s Loper Bright decision overruling Chevron. The decision has major ramifications for the restaurant, hospitality, and gaming industries, as well as establishing an analytic framework for evaluating regulations in a post-Chevron world.

Results may vary depending on your particular facts and legal circumstances.

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