Several months ago, the U.S. Department of Labor told its Wage and Hour Division to stop using the 80/20 rule, a long-standing regulation that required restaurants to pay servers, bartenders, and any other tipped employees a full minimum wage for any side work—stuff like folding napkins, refilling salt and pepper shakers, and putting silverware on the tables—if they spent more than 20% of their shift doing it.
As Restaurant Business explains, as long as those workers spent less than 20% of their time, say, scraping dried ketchup off the seats, then their employers are allowed to take a ‘tip credit’ of as much as $5.12 an hour. That’s the reason why servers’ pre-tip hourly wages can be a paltry $2.13 per hour: Because the customers’ gratuities are supposed to make up the difference between two bucks and the federal minimum wage of $7.25 per hour.
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ANYWAY, restaurants have always harrumphed in the face of the 80/20 rule, insisting that servers do all of that boring-as-hell side work so they can get good tips, and that they should be allowed to hold back a tip credit for that time, too. (Servers have occasionally responded by suing their employers to get the full minimum wage for their side work.)
In February, the Department of Labor officially sided with Team Restaurant Owner, writing an “open letter” flat-out stating that servers’ tips can cover side work, so long as it’s “performed contemporaneously with direct customer-service duties, or for a reasonable time immediately before or after performing such direct-service duties.”
And on Monday, the Department pushed the 80/20 rule closer to extinction with another new proposal, one that allows restaurants to take a tip credit regardless of how much of the servers’ tip is spent on side work, as long as it’s done just before or after their tip-earning duties.
NPR reports that the Department also proposed another new rule that would change the way tips are shared between servers and cooks, kitchen workers and other “back of the house” positions that aren’t typically tipped or included in tip pools. But that only affects restaurants that pay all of its employees a standard minimum wage, and not the ones that take a tip credit. In those restaurants, tips can still only be shared among busboys, hostesses, and other workers who are pocketing $2.13 an hour. (Yes, this all feels pretty confusing—it isn’t just you.)
Regardless of the restaurant’s wage structure, the restaurants aren’t allowed to keep any of those gratuities, or to redistribute them as rewards or bonuses, or to pay kitchen workers less because they’ve started receiving tips. (That should be called ‘pulling a DoorDash.’) Any employer found guilty of that kind of infraction could face a fine of up to $1,100.
Although these potential changes have been applauded by the restaurant industry, others are already worried about how it could go wrong for the workers. “We worry very much that this allows employers to take advantage without having any sort of guidance that they also need in order to ensure they’re doing the right thing,” Judy Conti, director of government affairs with the National Employment Law Project, told NPR.
And Rep. Bobby Scott (D-Virginia) says that debates over the 80/20 rule and the ethics of tip sharing would stop if only the government got rid of that $2.13-an-hour thing and started paying restaurant workers the full hourly minimum, period.
Scott, who is also the Chairman of the House Committee on Education and Labor, introduced the Raise the Wage Act of 2019 in January, a bill that would increase the federal minimum wage to $15 an hour by 2024. In a fact sheet, he wrote that Raise the Wage would also “guarantee tipped workers are paid at least the full federal minimum wage by phasing out the subminimum wage for tipped workers, which will ensure consistent, livable pay without eliminating tips.”
The House passed the bill in July, but the Republican-controlled Senate said that it was not considering the legislation, period. The fight, however, is not over.
