DOL Withdraws Guidance Behind 80/20 Rule for Tipped Employees
The Department of Labor recently issued a bulletin withdrawing three opinion letters that led to the 80/20 rule for tipped employees. The rule generally barred employers from claiming the tip credit for time that tipped employees spent on related, non-tip-producing duties beyond 20% of their workweek.
Why DOL Acted Now
DOL dropped the 80/20 guidance from its handbook in January 2025, after a federal appeals court struck down the rule in August 2024. The bulletin officially retires the older letters that remained on the books. The agency is developing a proposed rule on tipped employees.
For payroll teams, the bulletin confirms that DOL no longer enforces percentage-based limits on duties within a tipped occupation. Employers still cannot claim a tip credit for hours worked in a separate, non-tipped job. Employers must also follow state requirements, which may be stricter or prohibit tip credits.
More info: Field Assistance Bulletin No. 2026-1.
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