DOL withdraws decades-old tip credit opinion letters and confirms end of 80/20 rule

Employers of tipped workers no longer need to track how much time servers, bartenders, and similar staff spend on side work to keep their tip credit, according to a field assistance bulletin issued by the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) on October 19, 2026 (FAB No. 2026-1). The bulletin confirmed that the long-standing “80/20 rule” is dead. Going forward, the issue of eligibility for the tip credit will look solely to the question of whether an employee is working in a tipped job, including the related duties that come with it, and not how many minutes the employee spends on other tasks that don’t earn tips.

That is welcome news for restaurants, bars, hotels, casinos, clubs, salons, and other businesses with tipped staff. The 80/20 rule has long dictated who could roll silverware or handle opening and closing side work, and it has fueled a steady stream of class and collective actions seeking back wages. Because tip credit liability adds up across every hour worked, even small missteps could be costly.

Change in brief