News & Resources


DOL Proposes Delay of Tip Credit, Worker Classification Rules

BY: Jyme Mariani, Esq. | 02/05/21

The U.S. Department of Labor (DOL) proposed delaying the effective date of two final rules under the Fair Labor Standards Act (FLSA): tip credit and worker classification [86 F.R. 8325, 2-5-21; 86 F.R. 8326, 2-5-21]. The delays are a result of President Biden’s memorandum, issued on January 20, requesting a regulatory freeze to allow review of new or pending rules.

Tip Credit Rule

On December 30, the DOL announced a final rule to amend the FLSA tip credit, with an effective date of March 1 (85 F.R. 86756, 12-30-20). The final rule implements provisions of the Consolidated Appropriations Act, 2018 and codifies existing guidance under the FLSA. The request for delay would move the rule’s effective date to April 30.

Worker Classification Rule

On January 7, the DOL issued a final rule to determine whether a worker is an employee or an independent contractor under the FLSA, with an effective date of March 8 (86 F.R. 1168, 1-7-21). The final rule uses an economic reality test to determine if a worker is an FLSA employee or an independent contractor. The request for delay would move the rule’s effective date to May 7.

Submitting Comments

The DOL is accepting comments through the Federal eRulemaking Portal and by mail: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue N.W., Washington, DC 20210.

Tip comments are due by February 17 and should include Regulatory Information Number (RIN) 1235-AA21. Worker classification comments are due by February 24 and should include RIN 1235-AA34.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!

Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.