DOL Withdraws 80/20 Rule for Tipped Employees
Hospitality operators no longer need to track non-tipped side work percentages for compliance under the new guidance.
Updated on Oct. 27, 2026 in Employment
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The Department of Labor has officially withdrawn its 80/20 guidance on tipped employees, signaling a major policy shift for restaurant and hospitality operators. This move aligns federal enforcement with the 2024 Fifth Circuit court ruling that invalidated the 2021 Dual Jobs Final Rule.
Why it matters
Operators must now shift focus from tracking the percentage of time employees spend on non-tipped tasks to identifying if those duties are related to the tipped occupation itself. This change eliminates the compliance burden of the 80/20 rule and returns to the historical standard for managing dual roles.
The Department of Labor has formally ended its reliance on the 80/20 rule, which previously restricted non-tipped work to 20% of an employee's shift. Tipped status remains defined by the threshold of receiving at least $30 per month in tips.
The players
Department of Labor
The federal agency responsible for setting and enforcing labor standards and workplace regulations nationwide.
Fifth Circuit Court of Appeals
The federal appellate court with jurisdiction over Texas, Louisiana, and Mississippi that issued the 2024 ruling against the 2021 rule.
The details
Under the new guidance, employers no longer face the rigid 80/20 threshold that dictated how much time an employee could spend on non-tip-producing side work. Instead, the focus shifts to whether tasks are directly related to the tipped occupation. This approach reverts to the reinstated 1967 dual jobs regulation, following the Fifth Circuit's decision to vacate the 2021 mandate that imposed strict time-based limits.
Timeline
1967: The original dual jobs regulation was first established.
August 2024: The Fifth Circuit Court of Appeals vacated the 2021 Dual Jobs Final Rule.
October 19, 2026: The Department of Labor issued a Field Assistance Bulletin formally withdrawing the 80/20 guidance.
Market Landscape
This policy pivot marks a return to the 1967 dual jobs regulation, effectively ending the period of uncertainty created by the 2021 Dual Jobs Final Rule. It represents a significant retreat from federal efforts to impose time-based accounting on service sector tasks.
Operators can immediately adjust their labor management strategies to move away from rigid time-tracking for side duties. Consult with legal counsel to ensure internal policies align with the restored 1967 regulatory standard while monitoring the Department of Labor's upcoming rulemaking process.
The takeaway
The end of the 80/20 rule is a practical win for operators, but it requires shifting focus from time logs to task classification. Audit your current labor practices and task descriptions now to ensure they align with the reinstated 1967 dual jobs framework rather than the defunct 2021 rule.
What happens next
The Department of Labor intends to release a notice of proposed rulemaking to update regulatory provisions for tipped workers, though no specific date for this release has been set.
Further reading
For more on managing payroll compliance and labor standards, visit the Employment section.
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Should federal regulations set specific time limits for non-tip-producing work by service employees?
