On April 28, 2021, the U.S. Department of Labor (DOL) announced that it is delaying implementation of part of the tip regulations, which were announced in December 2020 (the December Final Rule) and were to become effective April 30th.

What rules were delayed?  These three rules were delayed:

  • Assessing civil money penalties (CMPs) for managers and supervisors keeping tips. Under the December Final Rule, the DOL was allowed to assess CMPs only for managers or supervisors who improperly keep tips from employees if done repeatedly or willfully. However, the Fair Labor Standards Act (FLSA) allows the DOL to assess penalties for broader reasons.
  • Assessment of CMPs for willful violations. In an attempt to clarify what a “willful” violation of the FLSA is, the December Final Rule removed language explaining when an employer acts with reckless disregard for whether the conduct violated the FLSA.
  • Tip credit provision for dual job employees. In 2018 and 2019, the DOL issued guidance on employees who perform dual jobs, that is, they perform both tipped and non-tipped work. The DOL said employers can continue to take tip credit for non-tipped work so long as it’s performed at the same time or in close proximity to the tipped work, and it created O*NET, a database of job characteristics for employers to utilize in determining what’s tipped work and what is non-tipped work.

The December Final Rule codified this guidance but recognized O*NET only as a guideline, and not a definitive source.

Why the need for delay?  Like many events over the past couple of months, the Biden-Harris Administration wants to reassess the rules before implementing them. In fact, the DOL has opened a comment period for the the first two rules listed above.

The DOL also is doing a comprehensive review of the dual jobs rule in order to ensure it’s in harmony with other laws and regulations.  Its considering opening a comment period which indicates an interest in potentially revising this rule.

When will they become effective?  December 31, 2021.

What about the other parts of the December Final Rule?  The other parts, including recordkeeping, tip pooling for all employees regardless of tip credits, and when to pay tips, all went into effect on April 30, 2021.

Questions regarding the new tip rule?  Call The Coppola Firm for your FLSA-related questions.