United States: DOL Reissues 2009 Opinion Letter And Loosens Rules To Apply A Tip Credit To Employees Who Perform Side Work

Last Updated: November 15 2018
Article by Eli Freedberg

On November 8, 2018, the U.S. Department of Labor (DOL) reissued and adopted a nearly decade-old opinion letter to clarify how employers must pay tipped employees who perform dual jobs.

For years, hospitality employers have faced difficulty applying a tip credit towards their regularly and customarily tipped workers' wages when the workers engage in side work activities such as rolling silverware, filling salt and pepper shakers, brewing coffee, and cleaning and setting tables. The applicable regulation, 29 C.F.R. § 531.56(e), provides that if a tipped worker, such as a server or bartender, is also employed in an entirely separate occupation, such as a maintenance worker or a security guard, then the employer can only apply a tip credit towards the employee's wages when he or she is working as a waiter or bartender, and cannot apply the tip credit when the employee is working as a maintenance worker or security guard. The regulation also addresses the more common situation when a tipped employee is not working in an entirely separate occupation, but is performing side work tasks that are related to his or her job. The regulation indicates that the employer can apply a tip credit towards the tipped employee's wages for the time the employee spends on tasks related to the job even if those related tasks are not specifically directed towards producing or generating tips.

The DOL expounded on this regulation in its Field Operations Handbook (FOH), and in doing so, complicated matters. In this manual, the DOL declared than an employer is only allowed to apply a tip credit towards workers' wages when that employee is spending less than 20% of his or her shift performing related work that does not explicitly generate tips from guests. Specifically, the FOH provides that:

29 CFR 531.56(e) permits the employer to take a tip credit for time spent in duties related to the tipped occupation of an employee, even though such duties are not by themselves directed toward producing tips, provided such related duties are incidental to the regular duties of the tipped employees and are generally assigned to the tipped employee. For example, duties related to the tipped occupation may include a server who does preparatory or closing activities, rolls silverware and fills salt and pepper shakers while the restaurant is open, cleans and sets tables, makes coffee, and occasionally washes dishes or glasses. . . .

However, where the facts indicate that tipped employees spend a substantial amount of time (i.e., in excess of 20 percent of the hours worked in the tipped occupation in the workweek) performing such related duties, no tip credit may be taken for the time spent in those duties. All related duties count toward the 20 percent tolerance.1

The DOL seemingly adopted this arbitrary 20% limit at random because this guidance does not appear anywhere in the text of the Fair Labor Standards Act or its regulations.

In recent years, employees have filed class litigation lawsuits relying on the 20% standard to seek recovery of the tip credits for employees. While some courts found that the FOH was entitled to deference and adopted the 20% side work standard, other courts rejected the FOH's 20% limit on related side work duties.

On January 16, 2009, following conflicting court decisions on the issue, the DOL tried to clarify the confusion caused by the FOH and issued opinion letter FLSA 2009-23. In the opinion letter, the DOL stated that it did not intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as these tasks are performed contemporaneously with direct customer service duties. In other words, as long as the side work is "running side work" there is no limit to the amount of side work that can be performed. So if a server is brewing coffee, and rolling and polishing silverware during operational hours while she is also serving guests at other tables, this type of work can be performed, without limit, while the employer is still applying a tip credit towards the employee's wages. Presumably, for any opening or closing duties that are performed before guests arrive, or after guests leave, a limit would still apply.

In addition, the DOL, by reference, identified 25 distinct activities that are considered to be directly related to tip-producing duties.2 These tasks include:

  • Taking orders from patrons for food or beverages.
  • Checking with customers to ensure that they are enjoying their meals and taking action to correct any problems.
  • Checking patrons' identification to ensure they meet minimum age requirements for consumption of alcoholic beverages.
  • Collecting payments from customers.
  • Writing patrons' food orders on order slips, memorizing orders, or entering orders into computers for transmittal to kitchen staff.
  • Preparing checks that itemize and total meal costs and sales taxes.
  • Presenting menus to patrons and answering questions about menu items, making recommendations upon request.
  • Removing dishes and glasses from tables or counters and taking them to the kitchen for cleaning.
  • Serving food or beverages to patrons, and preparing or serving specialty dishes at tables as required.
  • Cleaning tables or counters after patrons have finished dining.
  • Preparing tables for meals, including setting up items such as linens, silverware, and glassware.
  • Explaining how various menu items are prepared, describing ingredients and cooking methods.
  • Assisting host or hostess by answering phones to take reservations or to-go orders, and by greeting, seating, and thanking guests.
  • Escorting customers to their tables.
  • Performing cleaning duties, such as sweeping and mopping floors, vacuuming carpets, tidying up server stations, taking out trash, or checking and cleaning bathrooms.
  • Informing customers of daily specials.
  • Preparing hot, cold, and mixed drinks for patrons, and chilling bottles of wine.
  • Rolling silverware, setting up food stations, or setting up dining areas to prepare for the next shift or for large parties.
  • Stocking service areas with supplies such as coffee, food, tableware, and linens.
  • Bringing wine selections to tables with appropriate glasses, and pouring the wines for customers.
  • Filling salt, pepper, sugar, cream, condiment, and napkin containers.
  • Describing and recommending wines to customers.
  • Performing food preparation duties such as preparing salads, appetizers, and cold dishes, portioning desserts, and brewing coffee.
  • Providing guests with information about local areas, including giving directions.
  • Garnishing and decorating dishes in preparation for serving.

This list is expansive and important because, for years, the plaintiffs' bar has argued that tasks such as rolling silverware, performing cleaning duties, preparing salads, brewing coffee, and preparing tables for meals are not tip-producing activities and should be counted toward the 20% limit.

Unfortunately, the DOL withdrew the opinion letter for consideration almost immediately after it was issued in 2009. However, on November 8, 2018, almost 10 years after the DOL issued this opinion letter, it reissued and adopted this letter in order to provide clarity on the dual-jobs conundrum that has been haunting hospitality employers for more than a decade. Accordingly, employers may rely on this opinion letter and cut off any future liability with respect to 20% claims pursuant to 29 U.S.C. § 258; however, as always, employers are encouraged to consult with their counsel prior to implementing any changes to side work policies.

In addition, hospitality employers should be aware that certain states have adopted their own version of the 20% rule and this opinion letter will not affect those states' laws or regulations. States that have adopted their own corresponding laws include Arkansas, Connecticut, Hawaii, Iowa, Maryland, New Hampshire, New York, Virginia and West Virginia. Employers with locations in those states are strongly advised to consult with local counsel to determine whether those states would adopt a position similar to the newly reissued opinion letter.


1 See DOL FOH § 30d00(f)(2)-(3).

2 This list can now be referenced here: https://www.onetonline.org/link/summary/35-3031.00.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions