DOL Tipped Employee Rules: The Final Rules, the 80/20 Rule and Where Things Stand in 2026

Not legal advice. This article summarizes federal rules and decisions as of November 6, 2026, with links to the original documents. State and local law can be stricter, and the Department of Labor has said it plans to propose new rules on tipped employees.

The headline on this page once announced a new Department of Labor final rule on tipped employees. Since then there have been several final rules, a lawsuit, a federal appeals court decision and a quiet reversal. If you run a restaurant with tipped staff, the details affect how you pay people and how you schedule side work. Here's the history in order, then what applies now.

What did the 2018 tip law change?

It barred employers, managers and supervisors from keeping employees' tips, and allowed broader tip pools when no tip credit is taken.

In March 2018, Congress amended section 3(m) of the Fair Labor Standards Act as part of a spending law. Two changes matter for restaurants. First, employers may not keep any part of employees' tips, and that includes managers and supervisors. Second, if an employer pays all employees at least the full minimum wage and takes no tip credit, it may require a tip pool that includes non-tipped workers such as cooks and dishwashers.

What did the December 2020 final rule do?

It wrote the 2018 changes into the regulations and addressed tip pools, managers, record-keeping and side work.

The DOL published a final rule on December 30, 2020. It updated the regulations to match the 2018 law: no tip retention by employers, managers or supervisors; tip pools including back-of-house workers allowed only when no tip credit is taken; and records employers must keep of tips. It also included a new approach to "dual jobs" that would have allowed a tip credit for related side work done within a reasonable time before or after tipped work.

Most of the rule took effect on April 30, 2021, after a delay. The side-work portion never took effect in that form, because the DOL replaced it.

What was the 80/20 and 30-minute rule?

A 2021 limit on how much non-tip-producing work a tipped employee could do while the employer still took the tip credit.

On October 29, 2021, the DOL published a "partial withdrawal" final rule, effective December 28, 2021. It divided a tipped employee's work into three kinds:

• Tip-producing work, such as taking orders and serving food and drinks.
• Directly supporting work, such as rolling silverware, stocking a station or cleaning tables during service.
• Work that isn't part of the tipped occupation, such as cleaning bathrooms or preparing food in the kitchen.

An employer could take the tip credit for directly supporting work only if it didn't exceed 20 percent of the employee's hours in the workweek and didn't run longer than 30 continuous minutes. Beyond those limits, and for work outside the tipped occupation, the employer had to pay full minimum wage. That's the 80/20/30 rule.

Restaurants found it hard to track. It required timekeeping by task, minute by minute, in a job where people switch between serving and side work constantly.

What did the Fifth Circuit decide in 2024?

It vacated the 2021 rule, holding that it conflicted with the FLSA and was arbitrary and capricious.

The Restaurant Law Center and the Texas Restaurant Association challenged the rule in federal court. On August 23, 2024, the U.S. Court of Appeals for the Fifth Circuit ruled for them in Restaurant Law Center v. U.S. Department of Labor. The court said the statute asks whether an employee is engaged in a tipped occupation, and that the DOL's task-by-task, time-limit approach didn't fit that question. It vacated the rule.

The court later granted the DOL's request for panel rehearing and issued a revised opinion on October 29, 2024, which clarified that the vacatur covered the 2021 changes and not other parts of the tip regulations.

What has the DOL done since?

It restored the older regulation, withdrew the 80/20 guidance, and announced a coming proposed rule.

On December 17, 2024, the DOL published a technical amendment, effective that day, that removed the 2021 text from 29 CFR 531.56 and restored the original dual jobs regulation from 1967. In January 2025, according to the DOL, it removed the 80/20 guidance from its Field Operations Handbook.

On October 19, 2026, the Wage and Hour Division issued Field Assistance Bulletin 2026-1. It withdrew three opinion letters from 1979, 1980 and 1985 about tip credits for related duties, confirmed that the old 80/20 handbook guidance no longer reflects DOL policy, and said the DOL is developing a proposed rule to amend the tipped employee regulations, with public comment to follow.

What applies to tipped employees right now?

The FLSA's tip credit rules, the 2018 tip ownership rules, and the 1967 dual jobs regulation, plus any stricter state law.

As of November 2026, under federal law:

• You may pay a tipped employee a cash wage of at least $2.13 an hour and take a tip credit of up to $5.12 toward the $7.25 minimum wage, if tips make up the difference and you've given the required notice. Our tip credit calculator runs the math.
• Employers, managers and supervisors can't keep employees' tips.
• A tip pool can include back-of-house employees only if you take no tip credit.
• Under the 1967 dual jobs regulation, the tip credit applies only to time spent in the tipped occupation. Related duties that are part of serving, like occasionally setting tables or making coffee, can count; time in a separate non-tipped job, like a shift as a cook, cannot.

What should restaurant owners do now?

Keep side work reasonable and clearly part of serving, pay full minimum wage for separate jobs, check state law, and watch for the DOL's proposed rule.

Practical steps:

1. Write down what side work servers and bartenders do, and keep it tied to their tipped job.
2. When someone works a shift in a non-tipped role, clock them in under that role and pay at least the full minimum wage for those hours.
3. Check your state. Several states don't allow a tip credit at all, and others have their own rules on side work and tip pools.
4. Keep records of hours by role, cash wages, tip credit claimed and tips reported.
5. Watch for the DOL's proposed rule, and review your practices with an employment attorney when it's published.

The rules have changed four times in six years. The parts that haven't changed, such as tip ownership, notice and making up any shortfall to minimum wage, are where most violations happen, and they're worth getting right first.