July 17, 2019

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Back from the Dead: The Revival of the 80/20 Rule

Recently, we discussed the U.S. Department of Labor’s (“DOLs”) rescission of the 80/20 rule.  Unfortunately, less than two months after the DOL’s rescission, the U.S. District Court for the Western District of Missouri rejected the DOL’s new guidance, claiming it is “unpersuasive and unworthy” of deference. 

As a reminder, the 80/20 rule requires businesses to pay tipped workers at least minimum wage (with no tip credit) for non-tip generating tasks when these tasks take up more than 20% of the tipped workers’ time. 

In Cope, et al. v. Let’s Eat Out, Inc., et al., Case No. 6:16-cv-03050, the court rejected the defendants’ motions to decertify the class of workers who claimed defendants violated the 80/20 rule. Defendants relied on the DOL’s recent rescission of the 80/20 rule.  The court denied the defendants’ motion to decertify, stating:

The abrupt issuance of an opinion letter purporting to change the DOL’s interpretation after years of consistently construing the [underlying regulation] as limited by the [80/20] rule does not persuade this court to apply a new interpretation to the litigation ….  The DOL does not offer reasoning or evidence of any thorough consideration for reversing course.

The court further stated that the DOL’s rescission does not stand up to either the Auer v. Robbins or Skidmore v. Swift & Co. deference standards set by the U.S. Supreme Court.  Specifically, the court explained that the rescission of the 80/20 rule was an “unfair surprise” to workers, as well as an unjustified departure from the DOL’s prior guidance.  The court further reasoned that the 80/20 rule is “a reasonable interpretation of the dual jobs regulation” – notwithstanding the DOL’s issuance of the November 2018 opinion letter or the update to the DOL’s investigation handbook.

This decision represents a step back for restaurant industry.While this is only one case, it is expected that Cope will be used by future plaintiffs bringing 80/20 rule violation claims on behalf of themselves and putative classes in the near future.Only time will tell whether other district courts across the country will follow the Western District of Missouri’s footsteps, or whether we will have a split in the circuits.

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Robert J. Hingula, Polsinelli, Education Matters Lawyer, Discipline Procedures Attorney
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Robert Hingula primarily focuses his practice on trial and counseling work involving labor and employment law.  Most recently, he has devoted a significant amount of his practice to representing employers in various industries in collective actions brought pursuant to the Fair Labor Standards Act.  As part of his representation, Mr. Hingula has advised and assisted clients with restructuring their compensation policies to comply with state and federal wage and hour laws.  Some of the industries Mr. Hingula has represented and counseled in wage and hour issues include...

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