Department of Labor Proposes Delay on Tip Regulations and Independent Contractor Rule

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Ervin Cohen & Jessup LLP

On February 5, 2021, the Department of Labor (DOL) published two notices of proposed ruling to delay the effective date of two rules finalized by the DOL under the Trump Administration regarding tips and independent contractor rules. The proposed delays are designed to allow the DOL “additional opportunity for review and consideration” of both rules.

The first rule is Tip Regulations Under the Fair Labor Standards Act (“Tip Regulations”), which was published on December 30, 2020, and set to go into effect on March 1, 2021. The proposed rule would delay the effective date of the Tip Regulations to April 30, 2021.  Members of the public are invited to comment on the proposed delay through February 17, 2021.

The second rule is entitled Independent Contractor Status Under the Fair Labor Standards Act (“Independent Contractor Rule”), which was published on January 7, 2021, and set to go into effect on March 8, 2021. The proposed rule would delay the effective date of the Independent Contractor Rule to May 7, 2021. Members of the public are invited to comment on the proposed delay through February 24, 2021.

The DOL’s delay is in accordance with President Biden’s January 20, 2021 directive for agencies to issue a “Regulatory Freeze Pending Review” of agency actions.

As we have noted in previous posts, California has its own rules about independent contractors and tip pooling, which must be followed by companies operating in the state.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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