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80/20 Proposal for Restaurants

by | Jul 12, 2021 | blog, Business, Industry News, Legislation, National Restaurant Consultants | 0 comments

At the end of June, the Department of Labor proposed a reinstatement of the 80/20 rule, seeking to “to address the application of the Fair Labor Standards Act (FLSA)’s tip credit to tipped employees who perform both tipped and non-tipped duties”, according to the Colorado Restaurant Association.

This proposal suggests, “if an employee performs work that directly supports tip-producing work for a substantial amount of time – exceeding 20 percent of all the hours worked during the employees workweek or exceeding 30 continuous minutes – ‘that worker is no longer performing labor that is part of the tipped occupation,’” said a newsletter announcement from the Colorado Restaurant Association. “The proposal goes on to clarify that employers may not take a tip credit for work that is not part of the tipped occupation.”

The difficulty with the 80/20 rule is the onus placed on restaurant ownership—and at a time, post-COVID, when maintaining staff has proven difficult.

“It’s a definite blow to our already struggling industry, putting more pressure on owners when they cant find staff,” said National Restaurant Consultants CEO Richard Weil, noting that the National Restaurant Association will be opposing the rule.

“Assigning arbitrary caps and attempting to micromanage restaurant work at the level of task assignment has led to mass compliance burdens and unnecessary and costly litigation,” said the Colorado Restaurant Association. “Restaurants attempting to emerge from the pandemic on solid footing should not be saddled with compliance and legal challenges that the reinstatement of this rule would create.” 

The National Restaurant Association will file comments, which are due on August 23, 2021. Our restaurant consultants will be closely monitoring the progress of this proposal and are prepared to advise our clients accordingly. If you have concerns about this potential proposal or are in need of assistance staffing your restaurant currently, a restaurant consultant can help. Contact us today for the most up-to-date information on staffing and related legislation.