That Rule broke down the work of tipped employees into 3 different categories of work:
1. Tip-producing — Work that "provides service to customers for which tipped employees receive tips."
2. Directly supporting — Work "performed in preparation of or to otherwise assist tip-producing customer service work." Think rolling silverware, filling saltshakers, or cutting garnishes.
3. Not part of the tipped occupation — Work that is neither tip-producing nor directly supporting, such as cleaning bathrooms.
Under the 80/20/30, employers could always pay tipped workers a statutory sub-minimum wage (and make up the difference with a credit for tips earned) for any work performed in category 1, and never for work performed in category 3.
For category 2, employers could only pay a sub-minimum wage and take a tip credit if the directly supporting work constituted less than 20% of the total hours in the workweek or was in chunks of less than 30 continuous minutes.
The 5th Circuit Court of Appeals tossed out the entire rule, concluding that it impermissibly focused on "the component tasks of a single occupation." The 5th Circuit relied in SCOTUS's recent Loper Bright decision, which changed the extent to which courts defer to agency rules and concluded that the Rule strayed too far from "the FLSA's focus on employees' occupations rather than on their discrete pursuit of tips."
This decision is a huge win for employers, who in its wake no longer have to monitor and manage the amount of time tipped workers are performing tipped vs. untipped work.
What does this mean for businesses that employ tipped workers … e.g., my craft brewery friends? While no one really knows for sure, the best guess is that this decision takes us all the way back to the DOL's 1967 "dual jobs" rule, which distinguished between the overall nature of the work performed, not for how long an employee performs tipped vs. untipped work.
If you are a business with tipped workers, you should be consulting with your employment counsel to discuss how you are paying your tipped workers to best ensure you are doing so legally.