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Restaurant workers and the 80/20 rule

On Behalf of | Jul 19, 2017 | Wage & Hour Laws

Tipping can be a substantial portion of income for Indiana restaurant workers. They should be aware of the 80/20 rule regarding the role of servers and how it can affect their tip credit.

According to the Fair Labor Standards Act, an employer is not allowed to claim a tip credit if there is a tipped employee that has more than one job, one of which is non-tipped. Typical job duties that may garner tips do not qualify as a dual job, and as a result, the employee is not eligible to receive minimum wages for those duties. An employer would be allowed take a tip credit for the duties that generate tips, even if all of the duties are not tipped-related, and still not be in violation of the FLSA.

There are two restrictions levied on the side work rule. First, an employee is entitled to minimum wage if the side work is not related to the tipped work the employee performs. Second, if the side work takes up over 20 percent of the employee’s work time throughout the week, the employee is entitled to minimum wage pay, even if the side work is tip-related. The 80/20 rule is located in the Field Operations Handbook issued by the United States Department of Labor. There are varying opinions among jurisdictions as to whether a violation of the rule qualifies as an FLSA cause of action.

Workers who believe that their employers have violated their rights under the Fair Labor Standards Act should speak with an employment law attorney. The attorney can investigate the situation and determine what legal resource might be available.


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