Labor Department says tipped-work guidance has no 80/20 cap

The U.S. Department of Labor’s Wage and Hour Division says its current guidance does not cap the time tipped employees may spend on related duties that do not themselves produce tips. In a bulletin issued Oct. 19, 2026, the division withdrew three opinion letters and said its approach focuses on whether duties relate to an employee’s tipped occupation, rather than whether they fall below a fixed share of work time.

The withdrawn letters were FLSA-895, dated Aug. 8, 1979; WH-502, dated March 28, 1980; and FLSA-854, dated Dec. 20, 1985. The division said the former percentage approach no longer reflects its current policy or interpretation.

How the old 20% benchmark worked i

The former 80/20 benchmark limited related, non-tip-producing duties to 20% of work time. For an eight-hour shift, 20% is 96 minutes. That calculation describes the former cap; it did not mean employees had to earn tips during 80% of every shift.

The bulletin describes the current regulatory focus as the relationship between the duties and the tipped occupation, rather than a fixed percentage of the shift. It also distinguishes related duties within a tipped occupation from work in a separate, non-tipped job.

The timeline matters: the division had already withdrawn the 80/20 language from its Field Operations Handbook in January 2025. The October 2026 bulletin therefore did not newly remove that handbook language; it withdrew the three opinion letters and stated the division’s current approach.

Guidance, not a new regulation i

The bulletin informs guidance used by employers and federal wage-and-hour staff when assessing tip-credit treatment. It does not amend the regulation or establish a final rule. Nor does the bulletin itself determine whether a particular worker’s pay changes: that depends on the job’s duties, pay practices, tips and applicable law. State and local wage requirements may be stricter than federal requirements.

The department says it is developing a proposed rule on tipped-employee regulations. It plans to invite public comments after the proposal is published, but the bulletin gives no publication date. The proposal’s terms are not established by this guidance.