DOL Withdraws Guidance Behind 80/20 Rule for Tipped Employees
The U.S. Department of Labor has issued Field Assistance Bulletin No. 2026-1, withdrawing three opinion letters that underpinned the 80/20 rule for tipped employees. That rule limited employers' tip credit for related non-tip duties to 20% of the workweek. A federal appeals court struck down the rule in August 2024, and DOL removed the guidance from its handbook in January 2025. The agency says it is developing a proposed rule on tipped employees. Payroll teams should note that employers still cannot claim the tip credit for hours in a separate, non-tipped job, and state rules may be stricter.
