80/20 Rule

The NYC Hospitality Alliance has continuously advocated for the reform of the NYS Department of Labor’s so-called 80/20 Rule that creates significant legal and financial liability for restaurants and hurts workers who want to work more hours and gain more skills. The law prohibits an employer from taking the tip credit for an employee if they work more than 20% or two hours of their shift in a non-tipped job capacity. Effectively this means employees are prohibited from working five hours of a shift as a bartender earning tips and then three hours doing inventory, tastings and purchasing, which is non-tipped work. If they do, they violate the 80/20 Rule and enormous financial liability results for the employer, including loss of the tip credit, double damages and attorney fees. The 80/20 Rule also prevents the employee from earning more money and gaining additional skill sets, thus limiting their income and opportunity for professional growth. The 80/20 Rule must be amended to provide employees more flexibility to work in a tipped and non-tipped capacity during the same shift.