DOL drops the last 80/20 guidance, ending federal time limits on $2.13 side work
Banquet servers and bartenders who set up and tear down now face one federal test: does the task belong to the tipped job? Colorado and eight jurisdictions that require the full minimum wage before tips keep their own rules, and a new DOL rule is pending.
A tipped server can now spend any share of a shift setting tables, making coffee or washing glasses at a cash wage as low as $2.13 an hour without hitting a federal time limit, as long as the work is related to the tipped job. On Oct. 19, 2026, the U.S. Department of Labor withdrew the last three opinion letters behind the "80/20 rule," which barred the tip credit for prep and maintenance work beyond 20 percent of the workday.
For banquet servers and event bartenders who also set up, stock and clean, the federal question is no longer how much of the shift goes to side work. It is whether each task belongs to the tipped job at all; hours in a separate, non-tipped job must still be paid at least $7.25. The change came in Field Assistance Bulletin No. 2026-1, signed by Wage and Hour Division Administrator Andrew B. Rogers.
- Eight places allow no tip credit. Alaska, California, Guam, Minnesota, Montana, Nevada, Oregon and Washington require the full state minimum wage before tips, and the federal change does not rewrite those rules.
- Colorado keeps its own cap. Side work paid with the state's $3.02 tip credit must take no more than 20% of weekly hours and run no longer than 30 minutes at a stretch.
- Courts may still cite 80/20. Littler notes some courts outside the Fifth Circuit (Texas, Louisiana and Mississippi) might rely on decades of 80/20-era case law.
- A new federal rule is pending. DOL is drafting a proposed rule on tipped employees, with public comment to follow. It had not been published as of Oct. 29, and no source says whether it will set a numeric limit.
- Check your pay stub. Ask whether load-in, setup and teardown hours are paid at the tipped rate or the full minimum wage, and ask to see hours broken out by role.
How does a tip credit work?
The tip credit is the part of the minimum wage an employer covers with a worker's tips instead of cash. Under federal law, an employer that takes one must pay at least $2.13 an hour in direct wages. It can count up to $5.12 an hour in tips toward the $7.25 minimum, and only when the worker's tips bring them to the full $7.25, according to the bulletin.
If tips fall short, the employer pays the difference. The tip credit can be smaller than $5.12 but never larger, and it cannot exceed the tips the worker received, under 29 C.F.R. 531.59(b).
One tipped hour at the federal minimum, with illustrative tip amounts
Tips cover the credit
You earn $2.13 in cash and at least $5.12 in tips. Together they reach $7.25, so the employer owes nothing more for the hour.Tips fall short
You earn $2.13 in cash and $3.00 in tips, or $5.13. The employer must add $2.12 in cash to reach $7.25.A separate non-tipped job
An hour in a separate job with no tips, like the maintenance example in DOL's rules, earns no tip credit. The employer pays at least $7.25 in cash.
Who counts as a tipped employee?
A tipped employee is someone in an occupation where they "customarily and regularly" receive more than $30 a month in tips, under section 3(t) of the Fair Labor Standards Act. Under 29 C.F.R. 531.56, your own tips decide this, not your crew's.
What an employer must tell you first
An employer tip credit is not automatic. Before taking it, the employer must tell tipped workers four things, under section 531.59(b):
- the cash wage it will pay;
- the extra amount it counts from tips, which cannot exceed the tips received;
- that workers keep all their tips, except for a tip pool limited to employees who customarily and regularly receive tips;
- that the tip credit does not apply to any worker who has not been told these rules.
What is the 80/20 rule, and why did DOL drop it?
The 80/20 rule grew out of three DOL opinion letters from 1979, 1980 and 1985 and a 1988 Field Operations Handbook. Under it, an employer could not take the tip credit for time spent on general preparation or maintenance beyond 20 percent of the workday. The 1985 letter involved a worker whose prep and maintenance duties took 30% to 40% of the day.
The rule has changed hands several times. HR Dive reports the first Trump administration dropped 80/20 in a 2018 opinion letter, and the Biden-era rule cited the old letters to bring it back.
| 80/20 approach (withdrawn) | Dual jobs rule now (1967 text) | |
|---|---|---|
| What is measured | Share of the workday spent on side work | Whether the duty is related to the tipped job |
| Time limit | 20 percent of the workday; the 2021 rule added a 30-continuous-minute limit | None |
| Status | Withdrawn as federal enforcement guidance | In force |
| Where it may still matter | Some courts outside the Fifth Circuit (Littler); Colorado state enforcement | Wage and Hour Division enforcement |
After the court ruling, DOL removed the 2021 text in a final rule published Dec. 17, 2024. The October bulletin closes the last gap. It says the three letters and the withdrawn handbook provision "should no longer be relied upon as WHD enforcement guidance."
DOL's stated reason: the 1985 letter judged individual tasks and treated 30 to 40 percent of the day as "substantial." The bulletin calls that inconsistent with the Fifth Circuit decision, which the agency "finds persuasive." DOL also said the letters "may be misread" as a test of whether each duty produces tips.
What counts as a related duty now
The federal test is now the 1967 text. A tipped worker can do duties related to the tipped job even when those duties do not earn tips themselves. The regulation's example is a waitress who spends part of her time "cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses." Such related duties, in the regulation's words, "need not by themselves be directed toward producing tips."
The bulletin also rules out percentage limits:
any guidance that contemplates specific time limits on duties performed within a tipped occupation no longer reflects WHD policy.
Setup and cleanup at events
Nothing in the bulletin mentions event work. Its examples come from restaurants and hotels, so applying it to a banquet server, bartender or cocktail server is our reading, not DOL's. On that reading, off-the-floor work splits two ways:
Most event shifts mix both. Load-in, stocking a bar, resetting a ballroom and teardown can land on either side, depending on the task and how the employer defines your role. How each hour is classified now matters more than the clock.
What's next: courts, states and a new rule
DOL says it is drafting a proposed rule to amend the tipped-employee section of its regulations (Subpart D of Part 531) and will take public comments once it is published. As of Oct. 29, it had not been published. J.J. Keller reports the agency missed an August target for it. No source says whether the proposal will include a numeric limit on side work.
The bulletin sets federal enforcement policy. It does not bind every court. Littler notes some courts outside the Fifth Circuit, which covers Texas, Louisiana and Mississippi, might disregard DOL's current reading and rely on decades of case law built around the 80/20 rule.
State rules are a separate layer. In J.J. Keller's words, "State or local laws also might come into play." DOL's state table for tipped workers lists eight jurisdictions that require the full state minimum wage before tips: Alaska, California, Guam, Minnesota, Montana, Nevada, Oregon and Washington. A federal change does not rewrite those rules.
Colorado is keeping a version of the limit. Its Division of Labor Standards and Statistics will keep enforcing an 80/20 rule under state law, Campbell Litigation reports. Under the state's COMPS Order #40, an employer can take Colorado's $3.02 tip credit for side work only if the work directly supports serving customers, takes no more than 20% of weekly hours and runs no longer than 30 minutes at a stretch. Work that fails either limit is paid the full state minimum wage.
Questions to ask about your hours
If you work tipped event shifts and also handle setup, stocking or cleanup, ask your employer or staffing agency:
Keep your own notes on what you did and when. If the answers do not add up, your state labor department or the federal Wage and Hour Division handles wage questions. Comparing offers? Check event pay data by role and city, or browse open shifts.
For hirers: check the state first
Service charges follow different rules. Under 29 C.F.R. 531.55, a compulsory service charge is not a tip and cannot count toward the employer tip credit. The same goes for amounts a hotel negotiates with a customer for banquet facilities and distributes to staff. When an employer distributes service charges to employees, those payments can count toward the minimum wage. Our service charge vs tip guide covers the difference.
FAQ
What this means for tipped event staff
Federal tip rules no longer count minutes. They ask whether the work is part of the tipped job. For tipped event staff and the people who book them, the classification of each hour is now the number to check. New to the terms on a staffing contract? Our event glossary defines them.
