Recently, the DOL announced that it would delay until December 31, 2021, the effective date of certain provisions of the 2020 Tip Regulations Final Rule under the FLSA, including provisions addressing civil money penalties (CMPs) and the “80/20” rule under the FLSA’s “dual jobs” provisions.

The provisions of the Tip Final Rule that have been delayed until December 31, 2021, include:

  • Incorporation of the CAA’s requirements regarding civil money penalties (CMP) into the regulations and revision of additional portions of the DOL’s CMP regulations to address court decisions that have raised concerns.
  • Codification of recent guidance explaining that an employer may take a tip credit for time that an employee in a tipped occupation performs related non-tipped duties either contemporaneously with or for a reasonable time immediately before or after performing tipped duties (i.e., elimination of the “80/20” rule); the final rule also states that, in addition to the examples listed in the regulation, a non-tipped duty is presumed to be related to a tip-producing occupation if it is listed as a task of the tip-producing occupation in the O*NET system, the DOL’s regularly updated database of occupational characteristics and worker requirements information across the U.S. economy.

All other provisions of the Tip Final Rule became effective as of April 30, 2021, and includes the following:

  • Allows employers that do not take a tip credit to implement mandatory “nontraditional” tip pools that include employees who do not customarily and regularly receive tips (cooks, dishwashers, etc.).
  • Prohibits employers—regardless of whether they take a tip credit—from keeping employees’ tips for any purpose, which includes prohibiting managers and supervisors from keeping tips received by employees.
  • Requires an employer that collects tips to facilitate a mandatory tip pool to fully redistribute the tips no less often than when it pays wages.
  • Incorporates a new recordkeeping requirement for employers that do not take a tip credit but collect employees’ tips to operate a mandatory tip pool.
  • Amends the regulations that address the payment of tipped employees under Executive Order 13658 (Establishing a Minimum Wage for Contractors) to reflect the corresponding changes in the FLSA regulations and to otherwise align those regulations with the Executive Order.