In January of 2022 the Federal Government installed a legal program that completely changed how restaurant employees are paid. This new legal framework totally altered how and when an employee can be paid less than the full minimum wage on a Tip Credit. If you work for tips in a restaurant, this is essentially everyone. However, that is not even the craziest thing about the change. The craziest thing is that not only does hardly anyone follow these regulations, most people don’t even know they exist! What are these regulations? They are usually referred to as the 80/20 regulations and I did my best to explain them in an article that I wrote last year:

The above article gives a much fuller explanation of the Rule, but the basic gist is that if you want to pay your employees less than minimum wage (In Massachusetts the current minimum wage is $15.00 per hour and the tipped minimum wage is $6.75 per hour) that employee can not spend more than 20 percent of their time doing non “tip producing work.” The article above goes into more depth as to what tip producing work is but what it breaks down to is if you have customers at your bar or table and you are providing services to them you can be paid $6.75 an hour for that time. But if you have no customers and are doing side work (rolling silverware, stocking, detailing tables, etc.) you cannot do this work for more than 20 percent of your total work time. Basically, if you are doing work that is directly generating tips, you can take the credit. If you are not, you can only do that for so long and if you exceed that time you must be paid the full minimum wage. On top of that “idle time,” i.e. time spent just hanging around waiting for customers to show up, counts as non tip producing work. Lastly, the regulations prevent you from doing this non tip producing work for more than 30 consecutive minutes.

How many servers and bartenders out there have spent 2 hours opening the restaurant and waiting around for people to show up? How many servers and bartenders have spent 90 minutes closing the restaurant long after any customers have left? The answer is all of them! The regulations say that you cannot do this for more than 30 consecutive minutes, so the rest of that time must be paid at the full minimum wage!

So why am I writing this now? This rule has been challenged in the Courts and just upheld on appeal. It can still be further appealed but as for now it is still the law of the land. Who knows what the future holds, but as for now the 80/20 regulations control the Tip Credit and essentially no one has even heard of them. Be the person who does know!


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