[Federal Register Volume 86, Number 23 (Friday, February 5, 2021)]
[Proposed Rules]
[Pages 8325-8326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02485]


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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 10

Wage and Hour Division

29 CFR Parts 516, 531, 578, 579, and 580

RIN 1235-AA21


Tip Regulations Under the Fair Labor Standards Act (FLSA): Delay 
of Effective Date

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Proposed delay of effective date.

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SUMMARY: In accordance with the Presidential directive as expressed in 
the memorandum of January 20, 2021 from the Assistant to the President 
and Chief of Staff, entitled ``Regulatory Freeze Pending Review,'' this 
action proposes to delay until April 30, 2021 the effective date of the 
rule entitled Tip Regulations Under the Fair Labor Standards Act (``Tip 
Rule''), published in the Federal Register on December 30, 2020. The 
rule's current effective date is March 1, 2021. WHD seeks comments on 
this proposed delay, which would allow the Wage and Hour Division 
additional opportunity for review and consideration of the new rule.

DATES: Submit written comments on or before February 17, 2021.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1235-AA21, by either of the following methods: 
Electronic Comments: Submit comments through the Federal eRulemaking 
Portal at http://www.regulations.gov. Follow the instructions for 
submitting comments. Mail: Address written submissions to Division of 
Regulations, Legislation, and Interpretation, Wage and Hour Division, 
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, 
Washington, DC 20210. Instructions: Please submit only one copy of your 
comments by only one method. Commenters submitting file attachments on 
www.regulations.gov are advised that uploading text-recognized 
documents--i.e., documents in a native file format or documents which 
have undergone optical character recognition (OCR)--enable staff at the 
Department to more easily search and retrieve specific content included 
in your comment for consideration. Anyone who submits a comment 
(including duplicate comments) should understand and expect that the 
comment will become a

[[Page 8326]]

matter of public record and will be posted without change to https://www.regulations.gov, including any personal information provided. All 
comments must be received by 11:59 p.m. on February 17, 2021, for 
consideration in this proposed delay of effective date. The Department 
strongly recommends that commenters submit their comments 
electronically via http://www.regulations.gov to ensure timely receipt 
prior to the close of the comment period, as the Department continues 
to experience delays in the receipt of mail. Submit only one copy of 
your comments by only one method. Docket: For access to the docket to 
read background documents or comments, go to the Federal eRulemaking 
Portal at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Division of 
Regulations, Legislation, and Interpretation, Wage and Hour Division, 
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, 
Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
free number). Copies of this proposal may be obtained in alternative 
formats (Large Print, Braille, Audio Tape or Disc), upon request, by 
calling (202) 693-0675 (this is not a toll-free number). TTY/TDD 
callers may dial toll-free 1-877-889-5627 to obtain information or 
request materials in alternative formats.

SUPPLEMENTARY INFORMATION: In the Consolidated Appropriations Act of 
2018 (``CAA''), Congress amended section 3(m) of the Fair Labor 
Standards Act (``FLSA'' or ``Act'') to prohibit employers from keeping 
tips received by their employees, regardless of whether the employers 
take a tip credit under section 3(m). On December 30, 2020, the Wage 
and Hour Division (``WHD'') published Tip Regulations Under the Fair 
Labor Standards Act (the ``Tip Rule'') in the Federal Register to 
address these amendments. See 85 FR 86756. The Tip Rule would also 
codify WHD's guidance regarding the tip credit's application to tipped 
employees who perform tipped and non-tipped duties. See id. The 
effective date of the Tip Rule is March 1, 2021. See id.
    In a memorandum dated January 20, 2021 and entitled ``Regulatory 
Freeze Pending Review,'' (``Regulatory Freeze Memorandum'') published 
in the Federal Register on January 28, 2021 (86 FR 7424), the Assistant 
to the President and Chief of Staff, on behalf of the President, 
directed the heads of Executive Departments and Agencies to consider 
delaying the effective dates of all regulations that had been published 
in the Federal Register but had not yet taken effect until 60 days 
following the date of the memorandum or beyond; the Tip Rule falls into 
this category. The Regulatory Freeze Memorandum states that the purpose 
of such delays is for agencies to review any questions of fact, law, 
and policy that the rules may raise. The memorandum notes certain 
exceptions that do not apply here. On January 20, 2021, the Office of 
Management and Budget (OMB) also published OMB Memorandum M-21-14, 
Implementation of Memorandum Concerning Regulatory Freeze Pending 
Review, which provides guidance regarding the Regulatory Freeze 
Memorandum. See M-21-14, Implementation of Memorandum Concerning 
Regulatory Freeze Pending Review, https://www.whitehouse.gov/wp-content/uploads/2021/01/M-21-14-Regulatory-Review.pdf (last visited 
Jan. 26, 2021). OMB Memorandum M-21-14 explains that pursuant to the 
Regulatory Freeze Memorandum, agencies ``should consider postponing the 
effective dates for 60 days and reopening [the] rulemaking processes'' 
for ``rules that have not yet taken effect and about which questions 
involving law, fact, or policy have been raised.'' Id. In accordance 
with the Regulatory Freeze Memorandum and OMB Memorandum M-21-14, WHD 
proposes to delay the effective date of the Tip Rule by 60 days to 
April 30, 2021.
    Delaying the effective date of the Tip Rule for 60 days would 
provide WHD additional opportunity to review and consider the questions 
of law, policy, and fact raised by the rule, as contemplated by the 
Regulatory Freeze Memorandum and OMB Memorandum M-21-14, before the 
rule goes into effect. In particular, WHD could consider whether the 
Tip Rule properly implements the CAA Amendments to section 3(m) of the 
FLSA, which prohibit employers from keeping tips for any purpose, 
whether the Tip Rule adequately considered the possible costs, 
benefits, and transfers between employers and employees related to the 
codification of WHD's guidance regarding the tip credit's application 
to tipped employees who perform tipped and non-tipped duties, and 
whether the Tip Rule otherwise effectuates the CAA amendments to the 
FLSA, including the statutory provision for civil money penalties for 
violations of section 3(m)(2)(B) of the Act. Additionally, on January 
19, 2021, eight states and the District of Columbia filed a complaint 
for declaratory and injunctive relief in the United States District 
Court for the Eastern District of Pennsylvania, in which they argued 
that the Department violated the Administrative Procedure Act in 
promulgating the Tip Rule. The delay of the Tip Rule's effective date 
would also give WHD the opportunity to review and consider the rule in 
light of the issues raised by that complaint.
    WHD believes that the proposed delay, in accordance with the 
Regulatory Freeze Memorandum and OMB Memorandum M-21-14, is reasonable 
given the issues of fact, law, and policy raised by the rule, and will 
not be disruptive, given that the Tip Rule is not yet effective and WHD 
has not implemented the rule.
    WHD seeks comment on its proposal to delay the Tip Rule's effective 
date to April 30, 2021 in order to further review and consider the 
rule. WHD will consider only comments about its proposal to delay the 
Tip Rule's effective date.

Milton A. Stewart,
Acting Secretary of Labor.
[FR Doc. 2021-02485 Filed 2-3-21; 11:15 am]
BILLING CODE 4510-27-P