Ninth Circuit Perpetuates Uncertainty in 80/20 Rule for Employers of Tipped Workers

Executive Summary: On September 18, 2018, a year after a three-judge panel of the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of Marsh v. J. Alexander’s LLC, 869 F.3d 1108, a larger en banc panel of the court has overturned the previous decision, perpetuating uncertainty regarding timekeeping and minimum wage requirements for hospitality employers. The previous decision by a three-judge panel on September 6, 2017 had split with the Eighth Circuit over the U.S. Department of Labor’s (DOL) current position on the FLSA’s “dual jobs” regulation and what is commonly called the “80/20 rule,” which states that hospitality employers may not reduce a tip-earning employee’s hourly pay below the minimum wage when that employee spends more than 20 percent of his or her workweek on non-tip-earning tasks.