While deciding to make effective some portions of the Tipped Regulations Final Rule published in the final weeks of the former administration, the U.S. Department of Labor (DOL) has proposed further delay and consideration of the most controversial provisions of the Rule, including the elimination of the “80/20 Rule” that purports to limit the percentage of time (i.e., 20%) a tipped worker could spend performing allegedly non-tipped duties while still allowing the employer to take a tip credit.

The Tipped Regulations Final Rule was first published in December 2020 but in February 2021, the DOL issued a rule to delay its effective date until April 30, 2021. The DOL has now decided that, upon expiration of the April 30th extension, some provisions of the Final Rule will become effective, including the prohibition on employers – including managers and supervisors – keeping tips received by workers, regardless of whether the employer takes a tip credit. Notably, at least for now the DOL is also retaining the portion of the Final Rule which defines who constitutes a “manager or supervisor” for purposes of this tip retention prohibition, even though that definition was not part of the 2018 law passed by Congress that established the prohibition on tip retention by employers. However, the Agency is seeking further public comment on whether to further revise the “managers or supervisors” provisions “to better understand those who also engage in tipped work.” That 60-day comment period will begin on March 25, 2021.

The DOL also is also making effective as of April 30, 2021, the provisions of the Final Rule that allow employers not taking a tip credit to include traditionally non-tipped workers, such as cooks and dishwashers, in tip-sharing agreements (i.e., tip pools), subject to the prohibition against “managers or supervisors” retaining such tips.  DOL is also keeping the provisions of the Rule addressing the recordkeeping requirements related to tipped workers.

However, the DOL expressed its intent to “withdraw and re-propose” portions of the Final Rule that address the elimination of the so-called 80/20 Rule and other aspects of the Rule applicable to workers who perform both tipped and non-tipped (i.e. “dual”) jobs. DOL also expressed its intention to withdraw the provisions in the Rule addressing the assessment of civil money penalties. As to these provisions, the DOL is proposing a significantly longer extension – until November 2021 – “to evaluate additional information about the questions of law, policy, and fact” raised by the provisions. Because the current proposal only addresses whether the extension should occur, and not whether or how the Rule itself might be revised, the Agency is allowing only a brief, 20-day public comment period (also beginning on March 25th) on the proposed 8-month extension.