Demystifying the New 80/20 Tipping Rule: A Five-Step Plan to Ensure Compliance

At a dizzying 137 pages long, the 80/20 tipping rule was signed into legislation in October. Taking effect on December 28, 2021, the rule is proving confusing to owners, operators, and tip-producing and non-tip producing employees (especially since often that employee is one and the same within any given shift). Whether or not the law is repealed, it’s being enforced now and restaurant owners and operators need to get up to speed, and fast, to ensure they get–and stay–in compliance.

What Does it Mean?

The rule stipulates that workers can only be paid the tipped minimum ($2.13 per hour under federal law) for tasks that directly support tipped work and comprise no more than 20% (or 30 consecutive minutes) of a worker’s time. 

But What Does it Mean???

The rule looks at workers through the lens of three main types of work: tip-producing work (serving guests), work that directly supports tip-producing work (preparing to serve guests), and work that is not tip-producing (back-of house tasks and maintenance). 

How Do You Comply?

Track time. Track tasks. Track roles. If that sounds like a lot of tracking, it is. But only if you’re tracking manually. The key to simplifying 80/20 compliance is establishing a policy and leveraging the right technology, the right way. In short–with a balance of automation and attestation. Here are five simple steps that will help you get–and stay–in compliance:

Step 1: Put a Policy–and Expectations–In Place

With guidance from your legal team, create a restaurant policy that outlines your compliance strategy. Ensure that current and new employees have access to, and understand, the compliance plan and what it means for them. 

Step 2: A Job Code for Every Task

Servers wear many hats, and to stay in compliance, need many job codes. Or at least two. One for serving (tip-producing) work, and one for everything else. Create two job codes for employees to utilize. 

Step 3: Train Employees and Managers

Two codes are great, but train employees and managers so they fully understand the nuances of when they are supposed to use one or the other. Start by helping them understand the difference between tip-producing and supporting work and non-tipped work. Then drive home the importance of toggling between tasks by clocking out of one role and into another if they are going to be performing non-tip-producing work for more than 30 minutes. This is how you can best equip employees to input their time using the right code. 

Step 4: Checks and Balances

Prompt employees to confirm if 20 percent or more than 30 consecutive minutes of their shift was performing non-tip-producing work. By adding in a layer of attestation you can safeguard against employees who were too busy to clock in and out of the respective roles during their shift. This prompt, at the end of the night, enables them to provide a detailed description of the work they performed. 

Step 5: Validate

Adding a managerial validation step builds in a layer of transparency and protection. The manager can then verify the time worked by the employee.  Restaurant owners want a transparent–and near irrefutable–record of their compliance. With these five steps, they can come as close to a perfect solution for an imperfect legislation.