DOL Reviews Rules on Tipped Workers

On March 23rd, 2021, the Department of Labor (DOL) announced two Notices of Proposed Rulemaking related to tipped workers. The announcement came as the effective date approaches for the "Tip Regulations Under the Fair Labor Standards Act" final rule. The recent Notices of Proposed Rulemaking (NPRM) follows another NPR released earlier this month involving the prevailing wage rule.

Background on Tip Regulations Final Rule

The Tip Regulations Final Rule, published on December 30th, 2021, contained an original effective date of March 1st, 2021. On January 20th, 2021, the DOL proposed to delay the final rule and solicited public comments for opinions. Subsequently, on February 26, after reviewing the comments received, the DOL delayed the effective date until April 30th, 2021. The effective date's extension also allowed the DOL time to review the final rule extensively. After the review, the DOL declared that several portions of the original 2020 final rule would proceed. These regulations include:

• A prohibition on employers keeping tips received by workers, regardless of whether the employer takes a tip credit. This prohibition establishes significant protections for tipped workers.
• The ability of an employer who does not take a tip credit to include non-tipped workers in nontraditional tip-sharing agreements. Accordingly, this would boost non-tipped workers' earnings.

The DOL's review of the 2020 final rule involving tipped workers led to the two NPRMs released on March 23.

Overview of the Recent NPRMs

"Tip Regulations Under the Fair Labor Standards Act (FLSA); Delay of Effective Date" is the title of the first NPRM. The NPRM proposes to extend, until December 31st, 2021, the effective date of two portions of the original final rule. Specifically, these portions relate to:

• the assessment of civil money penalties (CMPs) under the FLSA; and
• addressing the FLSA tip credit's application to tipped workers who perform tipped and non-tipped duties.

The DOL invites public comments on this NPRM for 20 days following publication in the Federal Register on March 25. To comment on this NPRM, visit www.regulations.gov. "Tip Regulations under the Fair Labor Standards Act (FLSA); Partial Withdrawal" is the second NPRM in question. This regulation proposes withdrawing and re-proposing the two portions of the 2020 final rule addressing CMP assessments. The NPRM also seeks comments on the following:

• Whether to revise a part of the 2020 final rule addressing managers and supervisors who cannot keep employee's tips; and
• Suggestions on how the DOL can improve the recordkeeping requirements in the 2020 final rule in future rulemaking.

The DOL invites comments for 60 days following publication of this NPRM in the Federal Register, also on March 25. To comment on this NPRM, visit www.regulations.gov.

Employer Takeaways

In conclusion, the DOL encourages interested parties to submit comments for each NPRM by the respective comment period deadlines. Please note that Individuals submitting comments must send them in separately for each proposed rulemaking. Links to access each specific NPRM are available above.