Questions Remain for Employers as DOL Delays Parts of the 2020 Tip Rule

Restaurant employers still have questions about the 2020 Tip rule, and they may not get answers until December. The U.S. Department of Labor (DOL) just announced it will postpone and possibly revise some parts of the rule.

The DOL issued a final rule on Tip Regulations Under the Fair Labor Standards Act (FLSA), also called the 2020 Tip rule, in December 2020. The change in administrations led to uncertainty about the implementation of the rule. It was previously delayed until April 30. With this latest announcement, the DOL will split up the rule’s implementation and postpone three portions of the rule until Dec. 31. 

The DOL will delay these parts of the 2020 Tip rule:

• Assessment of civil money penalties (CMPs) for violating prohibitions on managers and supervisors keeping tips
• Assessment of CMPs for “willful” FLSA violations
• Application of the FLSA tip credit to tipped employees who perform tipped and non-tipped duties (dual jobs)

The DOL delayed implementation of these portions of the 2020 Tip rule so it could consider withdrawing and re-proposing the rules on assessments of CMPs and to receive comments on whether to revise the rule addressing “managers and supervisors” who cannot keep employee tips. The delay will also give the DOL more time to conduct rule-making to potentially revise the rule on the application of the FLSA’s tip credit provision to tipped employees who perform both tipped and non-tipped duties.

The rest of the 2020 Tip final rule—which covers the keeping of tips and tip pooling, recordkeeping, and minor technical updates to regulations to reflect the new statutory language and citations added by the Consolidated Appropriations Act amendments—will take effect on April 30.

Please contact Raquel Ramirez Jefferson or any member of Phelps’ Labor and Employment team if you have questions or need compliance advice and guidance.