U.S. Appeals Court Deal Blow to Biden / Harris Admin, Strikes Down 80/20 Labor Rule

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A recent ruling by the Fifth Circuit Court of Appeals has overturned the Department of Labor’s 2021 “80/20 rule” for tipped workers.

This decision marks a win for the restaurant industry and signals a shift in how labor regulations are interpreted following the Supreme Court’s rejection of the Chevron deference.

The now-defunct 80/20 rule allowed employers to pay tipped workers a lower base wage of $2.13 per hour for up to 20% of their time on support tasks.

For the remaining 80%, they had to pay the full $7.25 federal minimum wage. The appeals court found this rule “arbitrary and capricious” and at odds with the Fair Labor Standards Act.

This ruling backs the stance of the Restaurant Law Center and Texas Restaurant Association, who sued in 2021.

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They argued the Labor Department had overstepped by trying to rewrite labor law.

The court agreed, highlighting the need for clearer, more precise language in regulations.

For restaurants and other businesses with tipped workers, this creates some uncertainty. But it also opens the door to more flexible wage practices.

The decision raises questions about how to fairly pay for non-tipped work without the rigid 80/20 framework.

This case shows how the end of the Chevron deference is reshaping labor law.

Federal agencies can no longer broadly interpret vague statutes. Instead, regulations face stricter review, which could lead to more consistent rules across different administrations.

The impact goes beyond just restaurants.

It hints at a broader shift in how labor rules are made and understood across many industries.

Regulators will likely need to be more specific in their guidelines to avoid legal challenges.

While some may see this as a setback for workers’ rights, others view it as a correction to regulatory overreach.

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It could lead to more market-driven approaches to wages in the service industry, potentially benefiting both businesses and workers over time.