# DOL Rescinds Tip Credit Opinion Letters Amid FLSA Enforcement Shift The Department of Labor updates dual job regulations following ongoing legal challenges to tip policies. - **Source:** [HR Dive](https://www.hrdive.com) - **Published:** 2026-10-20 - **Topic:** [Operations](https://brifing.si/c/operations) - **Original article:** - **On Brifing:** https://brifing.si/s/38017c77-b57f-4bab-b528-ea084c76a754 ## Regulatory Shift on Tips The U.S. Department of Labor officially withdrew three opinion letters dating back to 1979, 1980, and 1985. These documents previously guided the application of the Fair Labor Standards Act regarding tipped employees in dual job roles. The agency stated these letters no longer accurately reflect their current interpretation of federal labor law. ## Defining Dual Job Roles Dual job employees perform both tipped and nontipped tasks within their occupation. Under current federal standards, employers may apply a tip credit toward the minimum wage only during time spent on tip-producing work. For nontipped hours, employers must pay the full applicable minimum wage, creating complex compliance requirements for service industry business operators. ## Historical Context of Rules For decades, the DOL enforced an 80/20 rule, prohibiting tip credits if nontipped duties exceeded 20% of work time. The 2018 and 2020 administrations attempted to remove this percentage-based standard. However, the Biden administration later reinstated the 80/20 regulation, which was subsequently vacated by the 5th U.S. Circuit Court of Appeals in 2024. ## Impact of Court Rulings The 5th U.S. Circuit Court of Appeals vacated the Biden-era 80/20 rule, ruling it inconsistent with the text of the Fair Labor Standards Act. This judicial intervention forced the Department of Labor to reevaluate its enforcement strategy. The agency now acknowledges that the previous opinion letters were potentially misread during past regulatory efforts. ## New Enforcement Priorities The agency is shifting its focus toward whether nontipped duties are directly related to the tipped occupation rather than imposing rigid percentage-based time limits. This approach aims to simplify compliance for employers while ensuring that tipped employees receive appropriate compensation for their specific tasks performed throughout their shifts in the service sector. ## Future Regulatory Proposals In July, the Department of Labor published a regulatory agenda confirming plans to issue a new proposal regarding tip credits for dual job workers. The agency reiterated this commitment on Monday, signaling that a formal rulemaking process is underway. Stakeholders will have the opportunity to provide comments once the proposal is officially published. ## Operational Compliance Challenges Employers must navigate a landscape where federal guidance frequently changes due to shifting presidential administrations and court rulings. Managing payroll for dual job roles requires precise tracking of time spent on tipped versus nontipped duties. Businesses must remain agile to adapt their internal compensation structures as new federal regulations are formally proposed. ## Strategic Implications for Employers The rescission of these letters marks a significant pivot in how the DOL approaches wage enforcement. By moving away from the 80/20 percentage threshold, the agency is attempting to align its policies with recent judicial feedback. Organizations should monitor upcoming proposals closely to ensure their payroll practices remain compliant with evolving federal standards. ## Sources covering this story - https://www.hrdive.com/news/dol-rescinds-potentially-misread-tip-rule-opinion-letters-flsa/833524/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._