On December 22, 2020, the U.S. Department of Labor (DOL) published a final rule to amend employee tip regulations under the Fair Labor Standards Act (FLSA). The final rule was scheduled to take effect on March 1, 2021; however, on February 26, 2021, the DOL delayed the rule’s effective date to April 30, 2021.
After reviewing the rule for consistency with law and policy, the DOL announced that it will allow provisions that increase worker protections and earnings to take effect in April, including provisions that:
- Prohibit employers (including managers and supervisors) from keeping their employees’ tips, regardless of whether the employer takes a tip credit; and
- Allow employers that do not take a tip credit to include non-tipped workers (including cooks and dishwashers) in nontraditional tip-sharing agreements.
While some provisions will be allowed to take effect, the DOL also proposed the following changes to the December employee tip regulations:
- A proposal to expand the circumstances in which the DOL can assess civil penalties and a request for comments on whether to extend the rule’s protections to tipped managers and supervisors; and
- A second proposal to further extend the delay for certain penalty provisions, as well as the rule for how to apply tip protections to employees who perform both tipped and non-tipped work, to Dec. 31, 2021.
Next Steps for Employers
Employers should continue their preparations to comply with the provisions of the rule scheduled to take effect in April. In addition, employers should continue to monitor DOL communications for possible updates on this and other labor and employment rules. In addition, the DOL is also seeking comments on whether to revise other portions of the final rule at www.regulations.gov through May 24, 2021.
HR Works will also continue to monitor any developments and provided updated information as it become available.