Publications + Presentations

Summary

• Lawsuits tied to the 80/20 Rule continue to increase in the restaurant and hospitality industry.
• Recent settlements show how side work, prep work, and off-the-clock issues create risk of wage and hour exposure.
• Employers should reevaluate how they assign and track non-tipped duties and how they use the tip credit.
• Clear job duty definitions, timekeeping practices, and manager training remain the most effective safeguards.

Restaurants and hospitality employers continue to face heightened scrutiny under the federal 80/20 Rule—also known as the Dual Jobs Rule—which limits the amount of time tipped employees may spend on non-tipped duties while the employer still claims the tip credit. Under this Rule, an employer may take the tip credit only if at least 80% of an employee’s work involves tip-producing duties and no more than 20% involves tasks that do not directly generate tips. Non-tipped work may include prep work, opening and closing tasks, stocking, cleaning, and any other responsibilities that do not directly support tip-producing service.

A recent $1.55 million settlement involving Jeff Ruby Culinary Entertainment in the Sixth Circuit underscores the types of claims that continue to arise under the 80/20 Rule. In that class action, more than 700 Employees alleged they spent substantial time on non-tipped duties and, in some cases, performed work before clocking in. Although the restaurant group denied wrongdoing, the settlement shows how issues related to side work and off-the-clock tasks can create substantial exposure for employers relying on the tip credit.

With the growing number of lawsuits and settlements tied to the 80/20 Rule, employers face a heightened risk of collective and class actions. Even minor inconsistencies in task assignments or documentation can lead to significant exposure. Courts are paying close attention to how employers define job duties, schedule tasks, and train supervisors on when the tip credit applies.

Ohio employers who use the tip credit should consider reassessing compliance practices and work policies. This includes reviewing which tasks qualify as tip-producing, evaluating how much time employees spend on prep work or other non-tipped duties, and determining whether adjustments are needed to ensure employees do not exceed the 20% threshold for non-tipped work. Employers may also need to update manager training to prevent off-the-clock work and ensure employees are paid the full minimum wage when required.

These wage and hour claims are not limited to one type or size of employer. Any business that uses tip credit may face risk if oversight is inconsistent or if job duties are unclear. By reviewing internal practices now, employers can reduce risk and align with current expectations within the Sixth Circuit.