Paul DeCamp Quoted in "DOL Scraps Wage Safeguard for Multitasking Tipped Workers"

The U.S. Department of Labor issued four opinion letters Thursday, including one that nixed guidance directing employers to pay tipped workers at least minimum wage for nontipped work that takes up a large chunk of their shift.

The tip memo, which restores 2009 guidance from then-acting Wage and Hour Division Administrator Alexander Passantino, rescinds the agency’s so-called 80-20 rule. This rule barred businesses from paying servers and other tip-based workers at the lower tipped minimum wage for nontipped work, such as polishing silverware or folding napkins, when such work takes up at least 20 percent of their day.

The DOL issued its guidance in the form of opinion letters, which are brief memos laying out how the agency’s Wage and Hour Division thinks businesses should pay workers in a given situation. The letters are issued in response to questions from the public and do not have the legal force of regulations, although courts pay them some deference as the DOL’s take on the law it interprets.

Paul DeCamp, an Epstein Becker Green attorney involved in a Texas federal court challenge to the 80-20 rule, applauded the new guidance Thursday.

“The Department of Labor has in many different ways over the years invented standards regarding tipped employment that have no basis in the Fair Labor Standards Act,” said DeCamp, who was also a Wage and Hour Division administrator. “This is another one of those instances, and now the department has righted a wrong.”

The 80-20 rule derived from a section of the DOL’s manual for investigators, called the Field Operations Handbook, saying that when workers spend “in excess of 20 percent” of their time on tasks “related” to their tipped work but that are not themselves tipped, employers can’t pay the tipped wage “for the time spent in those duties.” Employers can generally pay workers at the lower “tipped” minimum wage if workers make up the difference in tips.

This language was added in 1988 but “flew under the radar” until 2007, when the Western District of Missouri interpreted it to require that businesses pay workers the full minimum wage when they spend more than 20 percent of their time on nontipped tasks, Decamp said. That opinion proved to be a headache for employers.

“Restaurants historically have not tracked and kept records of, ‘OK, you spent five minutes doing cleaning and then spent 12 minutes with a customer, then went and spent six minutes filling salt-and-pepper shakers,’” DeCamp said. “We ended up with a lot of lawsuits.”