Waitstaff and servers in Texas restaurants may wish to play close attention to the 80/20 rule related to tip credit for minimum wage employees. In many places across the the country, restaurants are experiencing an increase in lawsuits related to violations of the rule, and more jurisdictions are beginning to uphold the rule in court.
The so-called 80/20 rule is published in the U.S. Department of Labor's Field Operations Handbook. While it is not binding law, many courts are upholding that violations to the rule do rise to the level of violating an employee's rights under the Fair Labor Standards Act. The rule stipulates than when an employee's duties include those that are not related to collecting tips, they must be paid at least minimum wage for the time spent doing those tasks when the amount of time spent is 20 percent of their work time or greater. This could include things not related to serving customers, such as taking out the trash, doing prep work in the kitchen or cleaning the restaurant.
While some employees may not be subject to the rule because they are always paid minimum wage, employers do have the right to take a tip credit from the employee's tip earnings based on the amount of hours worked. The DOL rule stipulates than when an employer takes a tip credit, the employee's paid wage must still fall within a certain amount and that work unrelated to tips cannot be subject to the tip credit.
Many tipped workers do not realize that their wages may be unfairly reduced by unlawful use of the tip credit. An employer may need to carefully track duties and time spent to ensure fair pay. Workers who think that they have been shortchanged might want to discuss their situation with an employment law attorney.