Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor
Comments on Regulatory Information Number (RIN) 1235-AA21: Tip Regulations under the Fair Labor Standards Act: Partial Withdrawal
Dear Ms. DeBisschop:
The National Employment Lawyers Association (NELA) supports the above-referenced Department of Labor (“Department” or “DOL”) proposed rulemaking, which clarifies that an employer may only take a tip credit when tipped employees perform work that produces tips or a non-substantial amount of work that directly supports tip-producing work, and defines “substantial amount of time” as more than 20 percent of all hours worked during the employee’s workweek or exceeding 30 continuous minutes.
NELA has an important interest in the Department’s proposal. NELA is the largest professional membership organization in the country comprised of attorneys who represent workers in labor, employment, and civil rights disputes. Founded in 1985, NELA advances employee rights and serves lawyers who advocate for equality and justice in the American workplace. NELA and its 69 circuit, state, and local affiliates have a membership of over 4,000 attorneys who are committed to working on behalf of those who have been treated illegally in the workplace. NELA members represent thousands of workers from around the country in wage theft cases in every state and circuit, which provides NELA with an important and insightful perspective on how issues surrounding tipping affect workers, especially those paid far below the minimum wage who rely on tipped wages to make a living. NELA members also have the experience to comment on the impacts the Department’s proposal will have on these workers and on enforcement of our nation’s wage theft laws.
In today’s economy and especially during the pandemic, the ability of employers to pay workers a subminimum tipped wage of $2.13/hour should be scrutinized and only narrowly permitted. The origins of the subminimum wage for tipped service jobs are rooted in racist and gendered carve-outs for work performed predominantly by workers of color and women workers, and this wage perpetuates inequality today. Even before the pandemic, median hourly earnings for people working in common tipped jobs like restaurant server and bartender were $12 or less, including tips, while poverty rates for tipped workers were more than twice as high as rates for working people overall. Women—disproportionately women of color—represent more than two-thirds of tipped workers nationwide, and are even more likely to experience poverty than their male counterparts. And the Department routinely identifies significant wage violations in industries with large concentrations of tipped workers, where employers have been able to violate rules with near impunity. Strengthening protections for people working in tipped jobs should thus be a priority for the Department, and this proposed rule takes important steps to do so.
I. Restoring the 80/20 rule permanently is incredibly important, because tipped workers should be paid at least the full minimum wage when non-tipped work consumes more than 20% of their time.
Under the longstanding “80/20 rule,” DOL guidance provided that employers could not pay a tipped employee the $2.13/hour subminimum wage for time beyond 20% of the workweek that the employee spends on tasks that are related to their job but do not produce tips. In the restaurant context, for example, if a server spent 12 hours in a 40-hour workweek on “side work”—like rolling silverware or setting tables—their employer would have to pay the full minimum wage for at least four of those hours (because eight hours of side work reaches the 20% limit). Under the Trump administration, however, the Department removed this crucial limit, allowing employers to pay just $2.13/hour for non-tipped work as long as those duties are done “contemporaneously with tipped duties or for a reasonable time immediately before or after performing the tipped duties.” See WHD Opinion Letter FLSA2018–27 (Nov. 8, 2018). But the Department did not define “reasonable time,” giving unscrupulous employers free rein to abuse the rule and making enforcement difficult.
The Economic Policy Institute estimated in 2019 that elimination of the 80/20 rule would allow employers to capture more than $700 million annually from workers, a number that has likely gone up as shifts in employer and consumer behavior during the pandemic—such as restaurants increasing carry-out and reducing dine-in service—have created much more non-tipped work in establishments that employ tipped workers. This loss would be especially harmful for women and people of color who are both disproportionately represented in the tipped workforce and have borne the brunt of the pandemic’s devastating impacts.
We support the Department’s restoration in the proposed rule of the 20% limit on related, non-tipped work for which an employer can pay a tipped employee less than the full minimum wage.
II. Under this rule, an employer also cannot take the tip credit when non-tipped duties are performed for a continuous period of time exceeding 30 minutes. Bright-line rules are important for clarity of application and to avoid subminimum wage pay for workers not properly treated as “tipped.”
The Department recognizes that a lack of bright-line rules makes compliance with and enforcement of the limitations on use of the tipped wage difficult. The proposal sets a threshold of 30 minutes of non-tipped work as an appropriate limit for determining when an employee is no longer performing work that is incidental to producing tips, and has therefore ceased being in a tipped occupation and must be paid at least the full minimum wage.
We support bright-line rules to enhance clarity and compliance with minimum wage and overtime rules. The 30 minutes of continuous non-tipped work standard meets this objective.
Thank you for your attention to these comments on a critical issue facing millions of workers. Please do not hesitate to reach out to Laura Flegel (firstname.lastname@example.org) with any questions.
Laura M. Flegel
National Employment Lawyers Association
Director of Legislative & Public Policy
 See, e.g., Michelle Alexander, Tipping Is a Legacy of Slavery, N.Y. Times (Feb. 5, 2021), https://www.nytimes.com/2021/02/05/opinion/minimum-wage-racism.html.
 According to the most recent national wage estimates, which are based on data collected between November 2017 and May 2020 (near the onset of the pandemic), median hourly wages, including tips, were $11.42 for waiters and waitresses and $12.00 for bartenders, the two largest groups of tipped workers. See U.S. Dep’t of Labor, Bureau of Labor Statistics, May 2020 National Occupational Employment and Wage Estimates, https://www.bls.gov/oes/current/oes_nat.htm. Tipped workers in other occupations have similarly low wages, such as barbers/hairstylists/cosmetologists ($13.28) and baggage porters and bellhops ($13.00). Id.
 See One Fair Wage: Women Fare Better in States with Equal Treatment for Tipped Workers, Nat’l Women’s Law Ctr. (Feb. 2021), https://nwlc.org/wp-content/uploads/2021/02/OFW-Factsheet-2021-v3.pdf.
 See generally, e.g., David Weil, Improving Workplace Conditions Through Strategic Enforcement (May 2010), https://www.dol.gov/whd/resources/strategicEnforcement.pdf.
 Heidi Shierholz & David Cooper, Workers Will Lose More Than $700 Million Annually Under Proposed DOL Rule, Econ. Policy Inst. (Nov. 30, 2019), https://www.epi.org/blog/workers-will-lose-more-than-700-million-dollars-annually-under-proposed-dol-rule/.