© 2025 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2025 ed. | 107 amount of time immediately before or after). The Eleventh Circuit declined to defer to this change, finding the 20 percent rule to be a reasonable construction of the FLSA.619 The DOL codified the 20 percent rule in a final regulation published in December 2021, but with a significant new requirement—non-tipped work could not be performed for continuous periods in excess of thirty minutes even if that work did not exceed 20 percent of the employee’s hours worked.620 However, in late 2024, the Fifth Circuit vacated the DOL’s 2021 80/20 regulation, finding that the regulation ran afoul of the plain text of the FLSA’s tip credit provision, including because it “applies the tip credit in a manner inconsistent with the FLSA's text.”621 Although the Fifth Circuit’s opinion means that the DOL’s 2021 80/20 regulation is no longer operative, that does not mean that there are no longer any limitations on the amount of non-tip-producing work permitted for an employer to be able to take the tip credit, particularly given the pre-2021 interpretations discussed above. However, restaurant and hospitality employers should tread carefully in determining their policies and practices around timekeeping and assignment of nontip producing tasks. In order to pay the lower service rate, commonly referred to as “taking the tip credit,” the employees in question must be customarily tipped employees and the employer must provide proper notice.622 To qualify as a “tipped employee,” one must customarily receive tips of more than $30.00 per month.623 The combination of tips and the service rate earned by the employee must meet or exceed the Massachusetts minimum wage.624 As of January 1, 2019, employers are expected to make this calculation at the completion of each shift worked by an employee.625 If the combination of an employee’s service rate and tips at the end of a given shift do not meet the minimum wage requirement, the employer must supplement the employee’s wages to meet the requirement.626 619 Rafferty v. Denny’s, Inc., 13 F.4th 1166, 1195 (11th Cir. 2021). 620 Previously, on November 8, 2018, the Department of Labor had issued an Opinion Letter rescinding the so-called “20 percent rule.” DOL Wage & Hour Opinion Letter FLSA 2018-27 (Nov. 8, 2018). But the Opinion Letter was withdrawn when the Department of Labor codified the 20 percent rule, with the new 30-minute exception, on December 28, 2021. Id.; 29 C.F.R. 531.56(f)(4)(ii). 621 Restaurant Law Ctr. v. U.S. Dept. of Lab., 120 F.4th 163, 174 (5th Cir. 2024). For context, the Western District Court of Texas had concluded that it was a permissible construction of the relevant statutory text, 29 U.S.C. § 203(t)—which does not define what it means to be an employee “engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips”— under the Supreme Court’s Chevron doctrine of agency deference. Restaurant Law Ctr. v. U.S. Dept. of Lab., Civ. No. 1:21-cv-1106-RP, 2023 WL 4375518 (W.D. Tex. Apr. 28, 2023). That decision was then appealed to the Fifth Circuit. 622 Under Massachusetts law, the notice must be in writing. See 454 C.M.R. § 27.03(2) et seq. 623 29 U.S.C. § 203(t). Although Massachusetts defines “tipped employees” as those regularly receiving more than $20.00 in tips each month, 454 C.M.R. § 27.02, under federal law employees must customarily and regularly receive more than $30.00 in tips each month, effectively making this the requirement. 29 U.S.C. § 203(t). The DLS has opined that “newly-hired employees who do not receive tips during their initial training period are not ‘tipped employees’” and therefore must be paid at least minimum wage during their training period. DLS Opinion Letter MW-2003-012 (Nov. 24, 2003). 624 M.G.L. ch. 151, § 1; 454 C.M.R. § 27.02. 625 M.G.L. ch. 151, § 7, as amended by St. 2018, ch. 121, § 27. 626 Id.
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