Hospitality Payroll Bookkeeping
DOL Just Withdrew the Letters Behind the 80/20 Rule: What Your Timekeeping Should Track Now
Published November 4, 2026 by Invisible LLC Team · 10 min read
You run the floor. You are not a wage-and-hour lawyer, and the last thing you need is another bulletin to read between a Friday lunch and a Saturday double.
So here is the short version, and then the part that actually touches your schedule.
The takeaways. On October 19, 2026, DOL's Wage and Hour Division issued Field Assistance Bulletin 2026-1, withdrawing the three old opinion letters — from 1979, 1980 and 1985 — that were the original source of the 80/20 rule. DOL's position is now that any guidance setting a specific time limit on duties performed within a tipped job no longer reflects its policy. The question is whether a duty is related to the tipped occupation, not how many minutes it consumed. That changes what your timekeeping should be built to prove, and it does not change the dollar floors, the notice requirement, or the manager tip-pool rules at all.
What DOL actually did
Field Assistance Bulletin 2026-1 withdrew three opinion letters:
| Letter |
Date |
What it addressed |
| FLSA-895 |
August 8, 1979 |
Whether an employer could take the tip credit for time a waitress spent prepping vegetables for the salad bar |
| WH-502 |
March 28, 1980 |
Time spent cleaning and stocking the server station, clearing and resetting tables, vacuuming the dining room carpet |
| FLSA-854 |
December 20, 1985 |
Non-tipped duties both related and unrelated to the tipped occupation of server |
DOL's language is direct: the 1979, 1980 and 1985 letters "no longer reflect [DOL] policy and, in some respects, do not accurately state the law. All are hereby withdrawn." The bulletin goes on to confirm that guidance contemplating specific time limits on duties performed within a tipped occupation no longer reflects DOL policy, and that the dual jobs regulation turns on whether the duties are related to the employee's tipped occupation (DOL news release; Field Assistance Bulletin No. 2026-1).
Two things to be precise about, because the trade coverage was loose on both.
First, what this is. A Field Assistance Bulletin is sub-regulatory guidance — DOL telling its own investigators how to apply the rules. It is not a regulation, not a final rule, and there is no Federal Register citation to go with it. If someone hands you an article citing a Federal Register document for this, they have probably picked up DOL's semiannual regulatory agenda by mistake. The agenda is a list of things DOL might do; this bulletin is a statement about what its investigators will do now.
Second, the date. DOL's own release and the bulletin's title carry October 19; at least one trade outlet reported October 20. We are going with October 19 on the strength of DOL's release, and flagging that we could not open the bulletin PDF directly to read a dateline off it.
The reason the withdrawal matters even though the 80/20 framework was already dead in the regulations is that those three letters were the source. They were what practitioners, payroll vendors, and plaintiffs' lawyers pointed at when they argued the percentage test still had life in it. Pulling them closes the loop. We covered the earlier half of that story — the 2024 court vacatur and the final rule that restored the pre-2021 regulation text — in our tip credit guide for brewpubs and restaurants, and we are not going to re-run it here. That post is the regulatory history. This one is about what you track going forward.
"Related to the tipped occupation," on the floor
The test is now qualitative, which is good news for your scheduling and slightly worse news for your recordkeeping, because qualitative tests are harder to prove with a timestamp.
Look at the three withdrawn letters again and you can see the shape of it. Clearing and resetting tables, stocking the server station, prepping garnish for the bar — these are things a server or bartender does as part of being a server or bartender. They support the tipped work and they happen inside the tipped shift. Under the current dual-jobs framework, that is related work, and it does not need a stopwatch on it.
What still matters is the genuinely separate job. If the same person comes in at 9 a.m. to do three hours of line prep before the dining room opens, or spends Sunday morning deep-cleaning the walk-in, that is not a server doing server-adjacent work. That is a second occupation, and the tip credit does not apply to it. This is the "dual jobs" part of the dual jobs regulation, and it survived everything — the 2021 rule, the vacatur, and now this withdrawal.
So the line you are drawing is not how long. It is which job.
Practically, that means your schedule and your timekeeping should be able to answer one question for any given hour: was this person working their tipped job, or a different job? If you can answer that cleanly, you are in good shape. If every hour is logged as one undifferentiated "server" code regardless of what the person was actually doing at 9 a.m., you cannot answer it, and the fact that the percentage cap is gone does not help you.
Why "we kept it under 20%" is no longer the answer to give
This is the part worth saying plainly, because a lot of operators have a well-rehearsed answer ready and it is now the wrong one.
For several years the defensive posture was arithmetic: we tracked side work, it stayed under 20% of the shift, no individual stretch ran past 30 consecutive minutes, here is the report. That answer made sense when the 2021 rule was live. It no longer maps onto the test DOL is applying.
Worse, it can actively hurt you in two ways. It implies you believe a time-based standard governs — which invites an argument about whether you measured it correctly — while saying nothing at all about the question that does govern. And if your tracking was built to produce percentages, it was probably built to bucket minutes rather than to distinguish occupations, which means the data you have is answering a question nobody is asking.
The answer that holds up now is a sentence about job assignment, backed by records: "Servers working tipped shifts perform their own side work, which is part of the server job. Prep and cleaning shifts are scheduled separately, coded separately, and paid at full minimum wage with no tip credit taken."
That is a defensible position. It is also a simpler one to operate than a stopwatch.
What to change in your POS and timekeeping this week
Four concrete moves. None of them requires new software.
1. Audit your job codes. Most POS and timekeeping systems — Toast, Square, Clover, Lightspeed — let you define multiple jobs per employee with a different pay rate on each. Confirm you have a tipped job code and at least one non-tipped job code (prep, porter, cleaning, admin), each with the correct rate attached.
2. Make sure people can actually clock into the right one. This is where it falls apart in practice. If your morning prep server has to clock in under "server" because that is the only code on their profile, the configuration is making the decision for you and making it wrong. Add the second job to their profile and train the clock-in.
3. Schedule the separate work as a separate shift. Not a blended one. A 9-to-12 prep shift and a 4-to-close serving shift, two entries, two codes. Blended shifts are where a wage-and-hour question becomes a reconstruction project, and reconstructing six months of intent from a single time punch is not a position you want to be in.
4. Retire the percentage report. If you built a side-work tracking report to prove 80/20, stop relying on it as your defense. Keep the underlying punch data — you want the history — but your documentation should now be your schedule, your job codes, and a one-page written policy saying which duties belong to which job.
That last one is worth ten minutes with whoever runs your payroll. The policy does not need to be long. It needs to exist and it needs to match what your punch data shows, because mismatches between a written policy and actual records are what turn a routine look into a bad week.
Three things this did not change
Operators keep asking us about these, so for the avoidance of doubt:
The dollar floors did not move. The federal cash wage for tipped employees and the federal minimum wage are where they were, and this bulletin did not touch either. Your state or city may set higher floors; those still bind.
The notice requirement did not move. You still have to tell tipped employees you are taking the tip credit, before you take it. Skipping that still voids the credit, and it is still the most common unforced error we see.
The manager and supervisor tip-pool rules did not move. We checked this specifically, because it would have been the most consequential ripple: FAB 2026-1 withdrew only the 1979, 1980 and 1985 letters. Opinion Letter FLSA2026-13 — the September 2026 letter confirming that a supervisor cannot keep any portion of other employees' tips even when working a bartending shift — is not part of the withdrawal and remains DOL's stated position. Our write-up of that letter, including the duties test and the 20%-equity-owner piece, is here and stands as written.
And a scope note: this is a tip credit post, not a tip reporting post. The W-2 side of tips — the OBBBA deduction, Box 12 reporting — is a different set of rules and we have covered it separately in no tax on tips and W-2 reporting and the overtime deduction and Code TT. Nothing in FAB 2026-1 touches either.
Your state may still run a clock
The most expensive mistake available right now is assuming federal withdrawal clears your state.
Several states never adopted the federal percentage framework and run their own tipped-wage rules; at least one — Colorado — has been flagged by employment counsel as continuing to apply a time-based limit on related duties regardless of what DOL withdrew (Rocky Mountain Employer, October 22, 2026). That is practitioner framing rather than a primary source, and we are not going to quote any state's specific test here, because they differ and they change.
The move is to confirm your own state directly with its labor department, and to do it before you relax anything. Where state and federal rules differ, the one more favorable to the employee generally governs — so a federal withdrawal is a ceiling being removed, not a floor.
Where this lands
Net of all of it, this is a simplification, and a welcome one. You are no longer being asked to run a clock on napkin folding. You are being asked to be clear about which job somebody is working, which is a question you can answer with a schedule and two job codes.
What makes it manageable is having it set up once, correctly, by someone who will also notice when a state rule changes. That is the work: job codes configured right, tipped and non-tipped shifts coded separately, a short written policy that matches the punch data, and payroll that runs clean on Thursday without you in the middle of it. It is what our payroll and benefits team does for restaurants and bars, with the bookkeeping behind it so the labor numbers in your weekly read are the same numbers payroll ran.
If tipped payroll has been landing on you — or on a GM who already has a full job — tell us how your shifts are structured and we'll tell you what needs to change.