US Department of Labor Proposes Rules to Help Tipped Workers

The U.S. Department of Labor has announced two Notices of Proposed Rulemaking related to tipped workers as the effective date approaches for the “Tip Regulations Under the Fair Labor Standards Act” final rule, which was published in December 2020.

On Feb. 26, 2021, the department issued a rule to delay the effective date of the 2020 final rule until April 30, 2021, to provide additional time to consider issues of law, policy and fact.

After considerable review, the department will allow several portions of the 2020 Tip final rule implementing the 2018 Consolidated Appropriations Act to go into effect, including the following:

• A prohibition on employers, including supervisors and managers, keeping tips received by workers, regardless of whether the employer takes a tip credit. This prohibition establishes significant protections for tipped employees.
• The ability of an employer that does not take a tip credit to include non-tipped workers, such as cooks and dishwashers, in nontraditional tip-sharing agreements and, by doing so, boost their earnings.

The department’s consideration and review of the 2020 Tips final rule has led to new proposed rules. 

The first NPRM proposes to withdraw and re-propose portions of the rule that narrow the circumstances in which the department can assess civil money penalties for violations. The department is also seeking comments on whether to revise the portion of the 2020 Tips final rule that addresses “managers or supervisors” to better understand those who also engage in tipped work.

The second NPRM proposes to extend further the effective date of three portions of the 2020 Tip final rule to Dec. 31, 2021. They are two portions that address the assessment of civil money penalties and the portion of the final rule that addresses the application of the FLSA tip credit to tipped employees who perform both tipped and non-tipped duties (i.e., dual jobs). The additional eight-month extension would provide the department the opportunity to evaluate additional information about the questions of law, policy and fact raised by these portions of the 2020 Tips final rule.

“Tipped workers are among those hardest hit amid the pandemic, and the Wage and Hour Division has made protecting these essential frontline workers a priority,” said Wage and Hour Division Deputy Administrator Jessica Looman. “The proposals we announced today ensure that we consider all of the circumstances in today’s rapidly changing workplace. These essential workers deserve our careful and thoughtful consideration as we craft and implement rules that affect their well-being.”

The department invites comments from the public on both proposed rules at www.regulations.gov.

Anyone who submits a comment (including duplicate comments) should understand and expect that the comment, including any personal information provided, will become a matter of public record. The division will post comments without change at www.regulations.gov and include any personal information provided. The division posts comments gathered and submitted by a third-party organization as a group, using a single document ID number at the site.