What The Returning 80/20 Tipping Rule Could Mean For Restaurant Workers

Last week, a class action lawsuit in Ohio was brought forth against Steak 'N Shake, accusing the chain of not adhering to the state's regulations for tip wage employment. Amongst the complaints, listed out by Class Actions Reporter, is that the company required employees to perform un-tipped work for more than 20% of the week's working hours. The obvious problem with this scenario is that if these types of workers are asked to do tasks that receive no tips, then they must still rely on the state's minimum wage for tipped workers, which in Ohio is $2.13 per hour, per Patriot Software.

On the same day as the class action lawsuit was filed, the United States Department of Labor announced a proposal for a new set of rules to limit the amount of non-tip earning work that these types of workers can be forced to do. There had once been an 80/20 rule in place, but as Fast Company noted, the Trump Administration rolled back the mandate in December 2020, effectively cutting the wages of the people most hit by the pandemic.

The new move by the US Department of Labor would now reinstate the rolled back regulation and add greater clarity to what work is considered "tip-earning." In so doing, "It helps ensure that tipped workers are treated with dignity and respect, and that they receive wages appropriate for the work they perform," says Jessica Looman, Principal Deputy Administrator for the Wage and Hour Division, in the press release. Most importantly, if the worker performs labor that is not tip-producing for more than 20% of their time, the work they do would no longer be considered as part of the tipped occupation. 

This could prompt restaurants to move away from tipping altogether

The enactment of a clear, enforcable line between what a worker can be expected to do and what they can't is, of course, huge — especially in the service industry. However, implementing such rules involves implications down the line, says Daniel Boatright, an attorney at employment law firm Littler Mendelson, per Nation's Restaurant News. Most notably, this could accelerate the trend away from allowing tipped work at all. (Some states have already enacted such bans.) If an employer would have to hire a new person to fulfill the tasks they would normally rely on their tipped workers to do, it would make more sense for them to simply hire the tipped person full-time.

The other factor that might push employers to the other side is that, since tip workers have to wait for customers to come for them to carry out their duties, they are paid — admittedly a minuscule amount — to do nothing but literally wait. 

However, the exact rules have yet to come out, so the roles that servers cannot do have yet to be defined. For example, will waiters be allowed to wipe tables even though that isn't tip-producing? Either way, the lawsuit filed against Steak 'N Shake will not just have Ohio's standards backing them, but potentially federal ones as well.