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DEPARTMENT OF LABOR is not a toll-free number). TTY/TDD (Pennsylvania complaint or callers may dial toll-free 1–877–889– Pennsylvania litigation).3 Office of the Secretary 5627 to obtain information or request A. First Delay of the 2020 Tip Final Rule materials in alternative formats. 29 CFR Part 10 Questions of interpretation or On February 26, 2021, after engaging enforcement of the agency’s existing in notice-and-comment rulemaking and Wage and Hour Division regulations may be directed to the considering the comments submitted, nearest WHD district office. Locate the the Department published a final rule 29 CFR Parts 531, 578, 579, and 580 nearest office by calling the WHD’s toll- (Delay Rule) extending the effective date free help line at (866) 4US–WAGE ((866) of the 2020 Tip final rule until April 30, RIN 1235–AA21 487–9243) between 8 a.m. and 5 p.m. in 2021, in order to provide the Tip Regulations Under the Fair Labor your local time zone, or log onto WHD’s Department additional opportunity to Standards Act (FLSA); Delay of website at https://www.dol.gov/ review and consider questions of law, Effective Date agencies/whd/contact/local-offices for a policy, and fact raised by the rule. See nationwide listing of WHD district and 86 FR 11632. The 60-day delay of the AGENCY: Wage and Hour Division, area offices. effective date of the 2020 Tip final rule Department of Labor. SUPPLEMENTARY INFORMATION: was sought pursuant to the Presidential ACTION: Final rule; delay of effective directive as expressed in the I. Background date. memorandum of January 20, 2021, from In the Consolidated Appropriations the Assistant to the President and Chief SUMMARY: This action finalizes the Act of 2018 (CAA), Congress added a of Staff, titled ‘‘Regulatory Freeze Department of Labor’s (Department) new statutory provision at section Pending Review.’’ See 86 FR 7424. proposal to further extend the effective 3(m)(2)(B) of the FLSA, which prohibits The Department explained in the date of three discrete portions of the employers from keeping tips received by Delay Rule that it would use the delay rule titled Tip Regulations Under the employees, regardless of whether the to review and consider, among other Fair Labor Standards Act (FLSA) (2020 employers take a tip credit under things, whether the 2020 Tip final rule Tip final rule), published December 30, section 3(m). Public Law 115–141, Div. properly implemented the CAA 2020. This further delay of three S., Tit. XII, sec. 1201, 132 Stat. 348, amendments to section 3(m) of the portions of the rule allows the 1148–49 (2018). The CAA also amended FLSA. In particular, the Delay Rule Department to complete a separate section 16(e)(2) of the FLSA to give the explained that the Department would rulemaking that proposes to withdraw Department discretion to impose civil review and consider the incorporation and re-propose two of these portions of money penalties (CMPs) up to $1,100 1 of the CAA’s language regarding CMPs the 2020 Tip final rule, published when employers unlawfully keep for violations of section 3(m)(2)(B) of the March 25, 2021, which includes, inter employees’ tips. On December 30, 2020, FLSA and whether the 2020 Tip final alia, a 60-day comment period and at the Department published Tip rule’s revisions to portions of the CMP least a 30-day delay between Regulations Under the Fair Labor regulations on willful violations were publication and the rule’s effective date. Standards Act (FLSA) (2020 Tip final appropriate. The Department would also It will also provide the Department rule) in the Federal Register to address review and consider whether the additional time to conduct another these CAA amendments. See 85 FR Department adequately considered the rulemaking to potentially revise that 86756. Unrelated to the CAA possible costs, benefits, and transfers portion of the 2020 Tip final rule amendments, the 2020 Tip final rule between employers and employees addressing the application of the FLSA’s also revises the definition of ‘‘willful’’ related to the 2020 Tip final rule’s tip credit provision to tipped employees in the Department’s CMP regulations, revisions to the Department’s dual jobs who perform both tipped and non- and would largely codify the Wage and regulations, which largely codified tipped duties. All of the remaining Hour Division’s (WHD) guidance 2 WHD’s recent guidance on the portions of the 2020 Tip final rule will issued in 2018 and 2019 regarding the application of the tip credit to tipped go into effect on April 30, 2021. application of the FLSA’s tip credit employees who perform tipped and DATES: As of April 29, 2021, the provision to tipped employees who non-tipped duties, as well as whether amendments to 29 CFR 10.28(b)(2), perform tipped and non-tipped duties. the 2020 Tip final rule otherwise 531.56(e), 578.1, 578.3, 578.4, 579.1, See id. The original effective date of the effectuates the CAA amendments to the 579.2, 580.2, 580.3, 580.12, and 580.18, 2020 Tip final rule was March 1, 2021. FLSA. See 86 FR 11634. The published December 30, 2020, at 85 FR See id. A legal challenge to the 2020 Tip Department explained that allowing the 86756, delayed until April 30, 2021, on final rule was filed on January 19, 2021 2020 Tip final rule to go into effect February 26, 2021, at 86 FR 11632, are by Attorneys General for eight states and while the Department reviewed these the District of Columbia (Pennsylvania further delayed until December 31, issues could lead to confusion among litigants), which is pending in the 2021. workers and employers in the event that United States District Court for the the Department proposed to revise the FOR FURTHER INFORMATION CONTACT: Eastern District of Pennsylvania 2020 Tip final rule after its review; Amy DeBisschop, Division of delaying the 2020 Tip final rule would Regulations, Legislation, and 1 The Federal Civil Penalties Inflation Adjustment avoid such confusion. Id. Interpretation, Wage and Hour Division, Act of 1990 (Pub. L. 101–410), as amended by the U.S. Department of Labor, Room S– Debt Collection Improvement Act of 1996 (Pub. L. B. Proposed Partial Delay of the 104–134, sec. 31001(s)) and the Federal Civil 3502, 200 Constitution Avenue NW, Penalties Inflation Adjustment Act Improvements Effective Date for Three Portions of the Washington, DC 20210; telephone: (202) Act of 2015 (Pub. L. 114–74, sec. 701), requires that 2020 Tip Final Rule 693–0406 (this is not a toll-free inflationary adjustments be made annually in these On March 25, 2021, the Department number). Copies of this document may civil money penalties according to a specified formula. proposed to delay the effective date of be obtained in alternative formats (Large 2 See WHD Field Assistance Bulletin 2019–2 (Feb. Print, Braille, Audio Tape or Disc), upon 15, 2019) and WHD Opinion Letter FLSA2018–27 3 Commonwealth of Pennsylvania et al. v. Scalia request, by calling (202) 693–0675 (this (Nov. 8, 2018). et al., No. 2:21-cv-00258 (E.D. Pa., Jan. 19, 2021).

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three portions of the 2020 Tip final rule recordkeeping,6 and those portions that for a section 3(m)(2)(B) violation. They for an additional 8 months, through made other minor changes to update the also posited that the 2020 Tip final December 31, 2021 (Partial Delay regulations to reflect the new statutory rule’s revisions to the meaning of NPRM): the two portions addressing the language and citations added by the willfulness, particularly its removal of assessment of CMPs; and the portion CAA amendments and clarify other language regarding the meaning of addressing the application of the FLSA references consistent with the statutory reckless disregard, contradicted tip credit to tipped employees who text 7—will become effective upon the Supreme Court precedent on willfulness perform tipped and non-tipped duties. expiration of the first effective date and Congressional intent. See 86 FR See 86 FR 15811. The first portion of the extension, which extended the effective 15813–14. 2020 Tip final rule that the Department date of the 2020 Tip final rule through The Department explained in the proposed to further delay addressed the April 30, 2021. In a separate NPRM, Partial Delay NPRM that, upon review assessment of CMPs for violations of titled Tip Regulations Under the Fair of the comments received regarding its section 3(m)(2)(B) of the FLSA, see 29 Labor Standards Act (FLSA); Partial Delay Rule and the Pennsylvania CFR 578.3(a)–(b), 578.4, 579.1, 580.2, Withdrawal, also published on March complaint, it was proposing to 580.3; 580.12; and 580.18(b)(3). 25, 2021 (CMP NPRM), the Department withdraw and re-propose the two Notwithstanding the fact that the CAA proposed to withdraw and revise the portions of the 2020 Tip final rule that amended section 16(e)(2) of the FLSA to two portions of the 2020 Tip final rule addressed the assessment of CMPs. See grant the Secretary discretion to assess which addressed the assessment of 86 FR 15813. The Department stated CMPs for violations of section CMPs under the FLSA: the portion that it preliminarily believed that it was 3(m)(2)(B) ‘‘as the Secretary determines which addressed the statutory provision necessary to delay these two portion of the 2020 Tip final rule while it appropriate,’’ the 2020 Tip final rule establishing CMPs for violations of completed this rulemaking to avoid limited the Secretary’s ability to assess section 3(m)(2)(B) of the Act and the codifying a limitation on the CMPs for violations of 3(m)(2)(B) to portion which addressed when a certain violation is ‘‘willful.’’ See 86 FR 15817.8 Department’s ability to assess CMPs for those instances where the violation is The Department explained in the violations of section 3(m)(2)(B) that may ‘‘repeated’’ or ‘‘willful.’’ See, e.g., 85 FR Partial Delay NPRM that the proposed lack a basis in law, to ensure that the 86772–73. The second portion of the partial 8-month delay, until December new regulations comport with the 2020 Tip final rule that the Department 31, 2021, would provide the Department Supreme Court precedent regarding the proposed to further delay amended the sufficient time to engage in a meaning of willfulness, and to prevent Department’s CMP regulations, see 29 comprehensive review of three portions confusion and uncertainty among the CFR 578.3(c) and 579.2, to address when of the 2020 Tip final rule—the two regulated community regarding what a violation of the FLSA is ‘‘willful.’’ See portions of the rule which addressed the constitutes a willful violation. See id. at 85 FR 86773–74. The third portion of assessment of CMPs under the FLSA 15813–14. the 2020 Tip final rule that the and the portion of the rule that The Partial Delay NPRM further noted Department proposed to further delay addressed the application of the FLSA that commenters on the Department’s amended its ‘‘dual jobs’’ regulations, see tip credit to tipped employees who proposed Delay Rule, as well as the 29 CFR 531.56(e),4 to largely codify perform tipped and non-tipped duties— Pennsylvania litigants, argued that the WHD guidance regarding when an and to take further action, as needed, to 2020 Tip final rule’s test for when an employer can continue to take a tip complete its review. See 86 FR 15815. employer can take a tip credit for a credit for an employee in a tipped The Department also explained that tipped employee who performs related, occupation who performs tipped and further review of these portions before non-tipped duties (dual jobs test) relied non-tipped duties. See 85 FR 86767–72. they go into effect is particularly on terms—‘‘contemporaneous with’’ and In its Partial Delay NPRM, the important given its concerns, which ‘‘a reasonable time immediately before Department sought comment on the were also raised by the commenters on or after tipped duties’’—that district proposed further delay of the effective the Department’s Delay Rule and the courts have found to be unclear; that the date of these three portions of the 2020 Pennsylvania litigants, that these rule’s use of the Occupational Tip final rule. See 86 FR 15811. The portions of the rule raised significant Information Network (O*NET) to define Department also sought substantive substantive and procedural issues. See ‘‘related duties’’ authorized employer comments on these three portions, and id. ‘‘conduct that has been prohibited in particular, on the merits of Commenters on the Department’s under the FLSA for decades’’ and withdrawing or retaining the portion of Delay Rule and the Pennsylvania unlawfully permitted employers to keep the rule that amended the Department’s litigants argued, for example, that the employees’ tips; and that the economic dual jobs regulations. See id. The portion of the 2020 Tip final rule that analysis of this portion of the rule failed Department did not propose to delay the addressed the assessment of CMPs for to quantify or consider its impact on effective date of the remaining violations of section 3(m)(2)(B) is workers and disregarded evidence provisions of the 2020 Tip final rule not inconsistent with the FLSA and submitted by a commenter on the NPRM addressed in the Partial Delay NPRM. Congressional intent, since section for the 2020 Tip final rule. See 86 FR The remaining provisions—consisting of 16(e)(2) of the FLSA does not require a 15814. Commenters on the Delay Rule those portions that addressed the finding of willfulness to assess a CMP and the Pennsylvania litigants also keeping of tips and tip pooling,5 called into question whether the portion 6 29 CFR 516.28(b). of the 2020 Tip final rule addressing the 7 29 CFR 531.50, 531.51, 531.52, 531.55, application of the FLSA tip credit to 4 See also 29 CFR 10.28(b)(2) (incorporating the 531.56(a), 531.56(c)–(d), 531.59, and 531.60. employees who perform tipped and same guidance on when an employer can continue 8 In the CMP NPRM, the Department also sought to take an FLSA tip credit for an employee who is comment on whether to revise one other portion of non-tipped work could withstand engaged in a tipped occupation and performs both the 2020 Tip final rule that addresses the meaning judicial review, including whether this tipped and non-tipped duties in the Department’s of ‘‘managers and supervisors’’ under section portion of the rule would withstand a regulations relating to Executive Order 13658, 3(m)(2)(B) of the FLSA and asked questions about challenge under the Administrative ‘‘Establishing a Minimum Wage for Contractors’’). how it might improve the recordkeeping 5 29 CFR 10.28(c), (e)–(f); 531.50 through 531.52, requirements in the 2020 Tip final rule in a future Procedure Act (APA) claiming that the 531.54. rulemaking. See 86 FR 15817, 15818. Department’s failure to include a

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quantitative economic analysis for this supported the Department’s proposal to ‘‘critical’’ and that allowing these portion of the rule was arbitrary and further delay the effective date of three portions of the rule to go into effect capricious. See id. portions of the 2020 Tip final rule. Five ‘‘could create irreparable harm that The Department stated in the Partial commenters opposed the proposed would result from decreased wages for Delay NPRM that, following its review partial delay.9 In advocating for the workers already struggling during a of the comments submitted on the proposed partial delay or opposing the pandemic.’’ NELP and the AGs also proposed Delay Rule and the proposed partial delay, all 22 argued that the Partial Delay is Pennsylvania complaint, it was commenters discussed the substance of important to give the Department time concerned that the 2020 Tip final rule the 2020 Tip final rule. Commenters to fully consider the allegations in the did not accurately identify when a who supported the proposed partial Pennsylvania complaint that these tipped employee who is performing delay based their support, in significant portions of the rule lack a foundation in non-tipped duties is still engaged in a part, on legal and policy concerns with or are otherwise inconsistent with tipped occupation. See 86 FR 15814–15. the three portions of the 2020 Tip final applicable law. NELP stated that Accordingly, the Department believed rule, as well as concerns with the rule’s allowing these three portions of the rule that it might be prudent to delay the economic analysis of the dual jobs to go into effect would cause confusion effective date of this portion of the 2020 portion of the rule. Commenters who and additional compliance costs if they Tip final rule so that it could consider opposed the proposed delay generally are ultimately invalidated after judicial whether to engage in further rulemaking expressed support for the legal, policy, review. The Economic Policy Institute on this issue before it codifies such a and factual conclusions made by the (EPI) also supported delaying the test for the first time into its regulations. Department in the 2020 Tip final rule, effective date of all three portions of the See id. The Department also stated that including in the three portions that the rule and stated that the Department it preliminarily believed that it would Department proposed to delay. should re-propose the dual jobs portion be disruptive to employers to adjust B. Comments in Support of the Partial of the rule to establish a standard that their practices to accommodate the new Delay is ‘‘no less protective’’ than the test articulated in the 2020 Tip final rule Department’s ‘‘longstanding 80/20 and then have to readjust if that test Seventeen commenters supported the Rule.’’ 10 does not survive judicial scrutiny or if Department’s proposal to delay the the Department decides to propose a effective date of three portions of the 1. Comments Regarding the Portions of new test, and that delaying the effective 2020 Tip final rule for an additional 8 the 2020 Tip Final Rule That Address date of this portion of the rule while the months, including nine Attorneys CMPs for Violations of Section Department conducted its review would General (AGs), the National 3(m)(2)(B) and Willful Violations of the address these concerns. See id. at 15815. Employment Law Project (NELP), FLSA National Women’s Law Center (NWLC), As noted above, a number of II. Comments and Decision Restaurant Opportunities Centers commenters supported further delaying A. Introduction United (ROC United), Women’s Law the two CMP portions of the 2020 Tip Project (WLP), Center for Law and The Department’s Partial Delay NPRM final rule to give the Department time to Social Policy (CLASP), Kentucky Equal consider the allegations raised in the sought comment on the proposed Justice Center (KEJC), One Fair Wage further delay of the effective date of Pennsylvania complaint and to (OFW), Oxfam America, Northwest complete further rulemaking. The AGs three portions of the 2020 Tip final rule: Workers’ Justice Project (NWJP), and many of the employee advocacy The two portions that addressed the National Urban League (NUL), Loyola organizations stated that they supported assessment of CMPs; and the portion of College of Law’s Workplace Justice further delay of the first portion of the the rule that revised the Department’s Project (WJP), Shriver Center on Poverty 2020 Tip final rule related to CMPs regulations to address the application of Law, Work Safe, Justice at Work, and which limits the assessment of CMPs to the FLSA tip credit to tipped employees the North Carolina Justice Center willful and repeated violations of who perform tipped and non-tipped (NCJC). The Center for Workplace section 3(m)(2)(B) because the rule is in duties. See 86 FR 15811. The Compliance (CWC) supported the conflict with the plain statutory Department also sought substantive Department’s proposal ‘‘to the extent language of the FLSA providing the comments on these three portions of the that it allows most provisions of the rule 2020 Tip final rule, and in particular, on to go into effect on April 30.’’ Secretary with discretion to assess those the merits of withdrawing or retaining The advocacy organizations that CMPs. See CLASP, KEJC, NCJC, NUL, the portion of the rule that amended the submitted comments in favor of the NWJP, NWLC, OFW, Oxfam America, Department’s dual jobs regulations. See Partial Delay NPRM urged the ROC United, WJP, and WLP. The AGs id. Department to finalize the delay as also argued that the second portion of A total of 22 organizations timely proposed in order to evaluate the the CMP regulations defining a commented on the Partial Delay NPRM questions of law, policy, and fact raised ‘‘willful’’ violation under the FLSA for (86 FR 15811, Mar. 25, 2021) during the by the portions of the 2020 Tip final which CMPs can be assessed unlawfully 20-day comment period that ended on rule proposed to be delayed. In its limits the definition of willfulness April 14, 2021. Comments may be comments supporting the Partial Delay because it conflicts with Supreme Court viewed on www.regulations.gov, NPRM, NELP argued that the delay was caselaw. A number of commenters, document ID WHD–2019–0004–0497. including the AGs, stated they would The Department received comments 9 The Department received three comments that submit substantive comments regarding from a broad array of stakeholders, are outside the scope of this rulemaking. An the assessment of CMPs in response to individual submitted a comment regarding issues the CMP NPRM published on March 25, including the Attorneys General for unrelated to the Department of Labor or the FLSA. eight states and the District of Columbia See WHD–2019–0004–0510. One organization 2021, in which the Department has who filed the Pennsylvania complaint, a submitted a duplicate of its comment. See WHD– 10 law firm, industry groups, non-profit 2019–0004–0511; WHD–2019–0004–0526. The As noted in the 2020 Tip final rule, the record also contains a document that was submitted Department’s 80/20 guidance became known as the organizations, and advocacy by a WHD official to test the Regulations.gov ‘‘80/20 rule,’’ even though it was not promulgated organizations. Seventeen commenters comment system. See WHD–2019–0004–0497. as a regulation. See 85 FR 86761.

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proposed withdrawing and reproposing considering the Department’s 2018–19 than its previous 80/20 guidance to those two portions of the rule. guidance, which uses these same terms, prevent abuse of the tip credit and to declined to accord deference to the protect low-wage tipped workers. These 2. Comments Regarding the Portion of guidance, in part because of this groups also urged the Department to the 2020 Tip Final Rule That Address ambiguity. Similarly, the AGs argued in consider the allegations raised in the Changes to the Dual Jobs Regulations at their comment supporting the Pennsylvania complaint related to the § 531.56(e) additional delay of the effective date for 2020 Tip final rule’s dual jobs provision A number of advocacy organizations the dual jobs portion of the rule that the and noted that the arguments raised in stated that they supported the 2020 Tip final rule will increase the complaint, particularly that the rule Department’s proposal to further delay litigation because it ‘‘implements a ‘‘contradicts the text and purpose of the the effective date for the 2020 Tip final vague standard that contains no [FLSA]’’ and ‘‘violated rulemaking rule’s dual jobs test for determining limitation on the non-tipped duties a process requirements, including failing when an employee is engaged in a tipped employee may be required to to analyze the impact the rule would tipped occupation, because it departs perform and still be paid the sub- have on tipped workers,’’ should be from the former Department guidance of minimum wage rate.’’ As evidence of seriously considered and addressed in using a 20 percent limitation on related, the vagueness of the standards, the AGs any future rulemaking. See CLASP; see non-tipped duties, and would permit point to the language in the 2020 Tip also KEJC, NWJP, NWLC, NUL, OFW, employers to continue paying tipped final rule which ‘‘states that Oxfam America, ROC United, and WLP. employees as little as $2.13 an hour for ‘contemporaneous’ means ‘during the In its comment supporting the Partial extensive periods of time where these same time as,’ before making the caveat Delay NPRM, EPI stated that the 2020 employees are not earning tips. See that it ‘does not necessarily mean that Tip final rule’s revision to the dual jobs CLASP, KEJC, NWJP, NWLC, NUL, the employee must perform tipped and regulations created a ‘‘less protective’’ OFW, Oxfam America, ROC United, and non-tipped duties at the exact same standard for tipped wages, replacing a WLP. Pointing to the Department’s moment in time.’ ’’ The AGs also argue firm 20 percent limitation on the acknowledgment in the 2019 tip NPRM that the 2020 Tip final rule nowhere amount of related non-tipped duties that that tipped employees might have a provides an explanation of what it tipped employees could perform while reduction in tipped income if they are means to be performing related duties being paid the tipped wage of $2.13 per allowed to perform more non-tipped ‘‘for a reasonable time.’’ The AGs hour with ‘‘vague and much less work while still being compensated as conclude that the additional extension protective’’ language. EPI criticized the little as $2.13 an hour, the groups for the effective date of this portion of dual jobs portion of the 2020 Tip final observed that the 2020 Tip final rule test the rule is necessary to give the rule as permitting ‘‘tipped workers to be could also have a significant, negative Department time to consider and review paid the subminimum tipped wage impact on non-tipped employees’ this issue and to complete the while performing an unlimited amount wages. They explained that if tipped rulemaking process if it decides to of non-tipped duties, as long as those employees are permitted to do more withdraw or revise the dual jobs non-tipped duties are performed non-tipped work at a lower rate of pay provision. ‘contemporaneously with tipped duties than non-tipped employees, it may The AGs also argued that the or for a reasonable time immediately result in lowering wages for non-tipped Department’s use of O*NET as a guide before or after performing the tipped employees. These commenters argued to determine which tasks are related or duties.’ ’’ EPI noted that because these that the 2020 Tip final rule’s dual jobs not related to a tipped occupation is new regulatory terms, such as test could also result in a reduction in flawed because O*NET, which is ‘‘reasonable time,’’ are not defined, they the number of employees hired to compiled from employee surveys of create an ‘‘ambiguity that would [be] perform non-tipped occupations, such tasks that they perform in the difficult to enforce’’ and would create as ‘‘cleaners, maintenance, prep, and occupation in which they are employed, ‘‘an immense loophole that would be back-office workers.’’ NWLC stated, ‘‘seeks to describe the work as it is, not costly to workers.’’ EPI also encouraged ‘‘[w]ith the regulatory barriers to abuse as is should be, and does not account for the Department to create a rule that is of the tip credit—and tipped FLSA violations in industries known to ‘‘stronger’’ than the previous 80/20 employees—all but removed, millions of have high violation rates, such as the guidance ‘‘that further clarifies, and working people could be required to do restaurant industry.’’ Thus, according to limits, the amount of non-tipped work more work for less pay.’’ the AGs, the use of O*NET ‘‘sanction[s] for which an employer can claim a tip Employee advocacy groups also conduct that has been prohibited under credit.’’ EPI suggested that the asserted that although the Department the FLSA for decades.’’ Department could, among other things, had justified the change to the dual jobs The employee advocacy groups also consider tightening the definitions of regulations in the 2020 Tip final rule by posited that the 2020 Tip final rule’s related and unrelated duties, propose to explaining that the new test was easier dual jobs provision conflicts with the adopt standards such as those adopted to administer than its previous 80/20 new statutory provision in section in states such as New York that, for guidance and would provide needed 3(m)(2)(B) of the FLSA prohibiting example, bar an employer from taking a clarity, the Department’s assertion is not employers from ‘‘keeping’’ tips, because tip credit on any day during which they borne out by the facts. As NELP stated, it allows employers to take a tip credit spend more than 20 percent of their ‘‘[t]o the contrary, the 80/20 rule has for a greater amount of time than the time in a non-tipped occupation, and/or been consistently used and accepted by Department’s previous 80/20 guidance. promulgate enhanced notice and courts and the Department itself over a These groups encouraged the recordkeeping requirements. 30-year period.’’ Other employee Department to abandon the 2020 Tip With respect to the economic analysis advocacy groups asserted that the new final rule’s dual jobs test and use a rule conducted on the dual jobs portion of dual jobs test uses ambiguous measures that minimizes, rather than maximizes, the 2020 Tip final rule, EPI suggested such as ‘‘contemporaneous with’’ and ‘‘a employers’ use of tips to satisfy their that it was flawed because it did not reasonable time’’, which could lead to minimum wage obligations. These sufficiently estimate the economic litigation over those terms. They also groups urged the Department to propose impact on workers—as EPI did in a noted that the vast majority of courts a new standard that is stronger even comment it submitted in the 2020 Tip

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rulemaking, which concluded that the Retail Federation (NRF),11 the National Tip final rule addressing the Secretary’s rule ‘‘would allow employers to capture Restaurant Association (NRA), and ability to assess CMPs for violations of more than $700 million annually from Littler Mendelson’s Workplace Policy section 3(m)(2)(B), as well as the workers.’’ The AGs and NELP also Institute (WPI) opposed the proposed identically-worded proposal in the argued in their comments in support of delay of the dual jobs portion of the NPRM for the 2020 Tip final rule, were the Partial Delay NPRM that the rule. The NRA also indicated that it consistent with the statute.13 would address the two portions of the Department’s failure to quantitatively 2. Comments Regarding the Portion of 2020 Tip final rule regarding the estimate the impact of the dual jobs the 2020 Tip Final Rule Addressing assessment of CMPs in a subsequent portion of the 2020 Tip final rule or to CMPs for Willful Violations of the FLSA consider the estimates of the rule’s comment on the CMP NPRM. All five impact submitted by EPI and other organizations expressed general support NFIB also opposed the proposed groups in the course of that rulemaking for the 2020 Tip final rule. The NRA delay to the portion of the 2020 Tip is evidence that the rulemaking was and NFIB also noted that the COVID–19 final rule that addressed CMPs for arbitrary and capricious under the APA. pandemic has posed serious challenges willful violations of the FLSA. for restaurants and other small According to NFIB, ‘‘the definitions of In its comments supporting the Partial 14 businesses, which the Department ‘repeatedly’ and ‘willfully’ set forth Delay, NELP also stated that a delayed should take into account in formulating in’’ in the 2020 Tip final rule’s revisions effective date of the dual jobs portion of its regulations. to the Department’s CMP regulations the rule would give the Department the ‘‘are reasonable and practical.’’ In the opportunity to consider how the rule 1. Comments Regarding the Portion of alternative, NFIB requested that the ‘‘improperly narrows the protections of the 2020 Tip Final Rule That Address Department maintain the 2020 Tip final the FLSA for tipped workers in a variety CMPs for Violations of Section rule’s revisions to the definition of of fast-growing industries including 3(m)(2)(B) willfulness for employers with fewer delivery, limousine and taxi, airport NFIB stated that the Department than 100 employers.15 In its prior workers, parking, carwash, valet, should allow the portion of the 2020 Tip comments, CWC expressed support for personal services and retail, in addition final rule that addressed the assessment the 2020 Tip final rule’s revisions to the to restaurants and hospitality.’’ of CMPs for violations of section definition of ‘‘willful’’ in its CMP Similarly, ROC United stated that the 3(m)(2)(B) to go into effect on April 30, regulations.16 recent pandemic had restructured the 2021.12 It argued that the 2020 Tip final 3. Comments Regarding the Portion of nature of tipped employment in ways rule appropriately limited the the 2020 Tip Final Rule Addressing that should be taken into consideration Department’s ability to assess CMPs for Changes to the Dual Jobs Regulations at in any future rulemaking. ROC United violations of section 3(m)(2)(B) to those § 531.56(e) urged the Department to consider in its instances where the violation is review of the dual jobs portion of the repeated or willful, since section In their comments opposing the 2020 Tip final rule that restaurant 16(e)(2) of the FLSA confers ‘‘wide Department’s proposed delay to the dual workers’ jobs had changed during the discretion’’ upon the Department. In the jobs portion of the 2020 Tip final rule, pandemic ‘‘to include significant alternative, NFIB requested that the the NRA and WPI argued that the 2020 additional tipped duties for non-tipped Department maintain the 2020 Tip final Tip final rule dual jobs test is ‘‘a step occupations, and significant additional rule’s limits on the assessment of CMPs in the right direction’’ and ‘‘faithful to non-tipped duties for tipped for violations of section 3(m)(2)(B) for the FLSA’s text’’ insofar as the revised occupations,’’ and that the expanded employers with fewer than 100 use of contactless service interactions employees, citing the particular 13 As noted above, WPI, the NRA, and NRF expressed general support for the 2020 Tip final and purchases during the pandemic, challenges of small businesses to rule. including app-based delivery, had comply with Federal regulations. CWC 14 The 2020 Tip final rule added a reference to ‘‘dramatically reduc[ed] customarily did not specifically oppose the violations of section 3(m)(2)(B) to the existing tipped interactions and increas[ed] proposed delay to the portion of the definition of ‘‘repeated’’ in the Department’s CMP tipping in non-tipped circumstances.’’ 2020 Tip final rule addressing the regulations but did not make any revisions to the definition of ‘‘repeated.’’ In the CMP NPRM, the assessment of CMPs for section C. Comments in Opposition of the Department has proposed removing the reference to 3(m)(2)(B) violations; however, in its 3(m)(2)(B) violations from the definition of repeated Partial Delay prior comments on the NPRMs for the but has not proposed any revisions to the 2020 Tip final rule and the Delay Rule, definition. See 85 FR 86756, 86792 (Dec. 30, 2020); Five organizations submitted 86 FR 15817, 15827–28 (March 25, 2021); 29 CFR comments that expressed opposition to CWC stated that this portion of the 2020 578.3(b) (defining ‘‘repeated’’). the Partial Delay NPRM. The National 15 Additionally, NFIB stated that the Department Federation of Independent Businesses 11 NRF and the National Council of Chain should ‘‘preserve the requirement in 29 CFR 578.4 Restaurants (NCCR), a division of NRF, submitted that, in determining the amount of a CMP, the (NFIB) opposed the Department’s a comment together. Department ‘shall consider the seriousness of the proposed delay in the two portions of 12 NFIB’s comment addresses both the Partial violations and the size of the employer’s the 2020 Tip final rule regarding the Delay NPRM and the separate NPRM that the business[.]’ ’’ The Department has proposed assessment of CMPs. CWC stated that it Department published on March 25, 2021. In delaying for 8 months the revisions to § 578.4 made addition to expressing its opposition to the delay by the 2020 Tip final rule, and proposed additional was ‘‘pleased to support DOL’s proposal of the portions of the 2020 Tip final rule addressing revisions to this section in its separate NPRM dated to the extent that it allows most CMPs, NFIB’s comment also opposes any further March 25, 2021 (CMP NPRM) to preserve the provisions of the rule to go into effect,’’ recordkeeping requirements and supports allowing Department’s authority to assess CMPs for though it ‘‘question[ed] the need to tipped managers and supervisors to keep their own violations of section 3(m)(2)(B). However, it has not tips received directly from customers. The proposed to revise the language in § 578.4 providing further delay the implementation of Department is not proposing to delay these portions that the Department ‘‘shall consider the seriousness important provisions of the final rule.’’ of the 2020 Tip final rule; accordingly, NFIB’s of the violations and the size of the employer’s CWC directed the Department to the comments regarding these matters are outside the business’’ in determining ‘‘the amount of penalty to prior comments it submitted on the scope of this rulemaking. The Department will be assessed.’’ See 86 FR 15817, 15828. 16 NPRM for the 2020 Tip final rule and consider NFIB’s comments regarding these matters As noted above, the NRA, NRF, and WPI also in the separate rulemaking, the comment period for expressed general support for the 2020 Tip final the Partial Delay NPRM. The National which closes on May 24, 2021. See 86 FR 15817. rule.

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dual jobs regulations eliminated the 20 the Department issued its current CMP NPRM before the expiration of this percent limitation on the amount of guidance, ‘‘employers had already been Partial Delay. The Department also time a tipped employee can perform adjusting.’’ WPI made a somewhat intends to initiate another rulemaking to related non-tipped duties and still be different argument: It noted that some potentially revise the portion of the paid a direct cash wage of no less than courts have continued to apply the 2020 Tip final rule related to the $2.13 per hour. In support of this Department’s prior 80/20 guidance on revision of its dual jobs regulations. position, the NRA and WPI argued that, related duties, rather than the Delaying these three portions of the since the FLSA permits employers to Department’s current guidance, and 2020 Tip final rule until after the take a tip credit for a ‘‘tipped stated that allowing the 2020 Tip final Department completes its review of employee,’’ defined as an employee rule’s revisions to the dual jobs these portions of the rule will allow the engaged in a tipped ‘‘occupation,’’ the regulations to go into effect would bring Department to reconsider legal, policy, FLSA does not provide any basis for clarity to employers. and factual conclusions on which these distinguishing between tipped workers’ Although WPI opposed the proposed three portions of the rule were based, tipped duties and non-tipped duties. delay in the dual jobs portion of the and about which commenters who See 29 U.S.C. 203(m), (t). 2020 Tip final rule, it included some supported the Partial Delay NPRM have Commenters who opposed the recommendations for the Department to raised concerns. Delaying these three proposed delay in the 2020 Tip final consider in the event that it ultimately portions of the 2020 Tip final rule until rule’s revisions to § 531.56(e) also proposes to withdraw and revise this after the Department completes its argued that the 2020 Tip final rule dual portion of the rule. WPI stated that any comprehensive review of these portions job test will be easier for employers to alternative should include ‘‘concrete of the rule will also prevent harm to the administer than the Department’s guidance on where the lines are to be Department, workers, and employers. In previous 80/20 guidance. In its prior drawn,’’ adding that, in its view, ‘‘there particular, delaying these three portions comment on the Delay Rule, CWC stated has been no clear definition of what of the 2020 Tip final rule until after the that the revisions to dual jobs test would duties are ‘tipped’ as opposed to merely Department completes its review will make compliance easier for employers; ‘related’ or ‘non-tipped.’ ’’ WPI further allow the Department to avoid codifying WPI likewise stated that the revised stated that any ‘‘quantitative limit’’ on changes to its regulations that it may dual jobs test’s use of O*NET to define duties that a tipped employee can ultimately determine to lack a basis in related non-tipped duties would make perform ‘‘must precisely identify which law and that may not survive judicial compliance simpler. Additionally, WPI duties fall on either side of the line,’’ scrutiny. It will also prevent changes to and the NRA stated that the revisions to recognize that occupations can evolve employment practices that may be the dual jobs test will lead to less over time, and draw upon O*NET as a contrary to the FLSA and harmful to litigation. resource. workers, and which may need to be The NRA also stated that there is no D. Discussion of Comments and reversed in the event the Department need to reconsider the dual jobs portion withdraws and revises these portions of of the 2020 Tip final rule, as ‘‘the Rationale for Finalizing the Partial Delay of the 2020 Tip Final Rule the 2020 Tip final rule, causing Department already took years to disruption to employers. And it will consider every angle.’’ According to the In the Partial Delay NPRM, the prevent confusion and uncertainty NRA, neither the Pennsylvania Department stated that, in accordance among workers and the regulated complaint nor the concerns with the with its review of questions of law, community while the Department rule’s economic analysis raised by policy, and fact raised by the 2020 Tip continues to review these portions of commenters such as EPI are grounds for final rule, most of the 2020 Tip final the 2020 Tip final rule. delaying any part of the 2020 Tip final rule will go into effect upon the rule. Regarding the Pennsylvania expiration of the first effective date 1. CMPs for Violating Section 3(m)(2)(B) complaint, the NRA emphasized that no extension, April 30, 2021. However, the The first portion of the 2020 Tip final court has ruled on any aspect of the Department proposed delaying three rule that the Department has proposed complaint and that there has not been portions of the 2020 Tip final rule for an to further delay addresses the any briefing. Regarding the economic additional 8 months—the two portions assessment of CMPs for violations of analysis, the NRA argued that EPI’s of the 2020 Tip final rule that addressed section 3(m)(2)(B) of the FLSA, which criticism of the 2020 Tip final rule the assessment of CMPs and the portion prohibits employers, including ‘‘rest[s] on the flawed premise’’ that the that revised the Department’s dual jobs managers and supervisors, from 2020 Tip final rule eliminated a regulations—in order to engage in a ‘‘keeping’’ tips. As discussed above, the ‘‘quantitative cap’’ on the amount of comprehensive review of the issues of CAA amended section 16(e)(2) of the related non-tipped duties a tipped law, fact, and policy raised by these FLSA to grant the Secretary discretion worker can perform, since the three portions of the 2020 Tip final rule to assess CMPs for ‘‘each such Department had already ‘‘abandoned’’ and to take further action, as needed, to violation’’ of section 3(m)(2)(B) ‘‘as the the quantitative cap in 2018 when it complete its review. Secretary determines appropriate.’’ See issued Opinion Letter FLSA 2018–27. After reviewing the comments 29 U.S.C. 216(e)(2). Unlike the statutory Therefore, ‘‘EPI’s baseline is simply received, the Department believes that provisions in section 16(e)(2) regarding incorrect.’’ these three portions of the 2020 Tip CMPs for minimum wage and overtime Commenters who opposed the final rule should be further delayed violations, the statute does not limit the proposed delay of the dual jobs portion until after the Department has assessment of CMPs to repeated or of the 2020 Tip final rule also expressed completed its comprehensive review of willful violations of section 3(m)(2)(B). concern that delaying this portion of the these portions of the rule. Pursuant to In the 2020 Tip final rule, the rule would be disruptive to employers. this review, the Department has already Department incorporated CMPs for NRF stated that its members had already initiated a separate rulemaking violations of section 3(m)(2)(B) into the undertaken ‘‘efforts to implement the proposing to withdraw and re-propose Department’s existing CMP regulations final rule in their operations the two portions of the rule addressing at 29 CFR parts 578, 579, and 580. The nationwide.’’ The NRA stated that the assessment of CMPs. The 2020 Tip final rule codifies in its ‘‘since at least November 2018,’’ when Department intends to complete the regulations the Department’s post CAA

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enforcement policy, see FAB No. 2018– penalties is contrary to the plain text of comprehensive review of this portion of 3, pursuant to which it assesses CMPs the statute,’’ and ‘‘flouts congressional the rule, in particular, to allow the only for repeated or willful violations of intent.’’ The NRA argues in its comment Department to consider the legal and section 3(m)(2)(B). that the Pennsylvania complaint does policy conclusions on which this However, in light of the comments not justify a further delay in the rule portion of the rule is based, and submitted in support of the because the court has not yet ruled on regarding which the AGs and advocacy Department’s Delay Rule and the the litigants’ claims. However, the organizations have raised serious Pennsylvania complaint, the Department believes that the AGs’ concerns. This delay will also permit Department became concerned that the argument regarding the statutory text the Department to conduct notice and 2020 Tip final rule inappropriately and and legislative intent is sufficiently comment rulemaking regarding its unlawfully circumscribed its authority persuasive to finalize the additional separate CMP NPRM, in which the to issue CMPs for section 3(m)(2)(B) delay of this portion of the rule, Department has proposed withdrawing violations. Accordingly, in the CMP particularly where any harm from the and reproposing the portion of the rule NPRM published simultaneously with delay is, on balance, offset by the need addressing the assessment of CMPs for the Partial Delay NPRM, the Department for additional consideration to avoid the violations of section 3(m)(2)(B), before proposed to withdraw this portion of possibility of codifying into the this portion of the rule goes into effect. the 2020 Tip final rule and proposed Department’s regulations provisions that The Department thus finalizes its revisions to parts 578, 579, and 580 of may not survive judicial scrutiny. proposed delay of the portion of the its regulations to eliminate the To the extent that NFIB, as well as the 2020 Tip final rule addressing the restriction on the Department’s ability to CWC, NRF, and the NRA, dispute that assessment of CMPs for violations of assess CMPs only for repeated and this portion of the 2020 Tip final rule section 3(m)(2)(B). The Department willful violations of section 3(m)(2)(B). raises serious legal and policy concerns notes that, upon review of the 86 FR 15817. In the Partial Delay NPRM, that merit further consideration by the comments it receives on the CMP the Department proposed delaying this Department, the Department disagrees. NPRM, which proposed to withdraw portion of the rule until after the Citing the ‘‘wide discretion’’ that FLSA and re-propose this portion of the rule, Department completes its review, section 16(e)(2) affords the Department it may determine that it is not explaining that this delay would avoid in determining whether to assess CMPs appropriate to withdraw or amend this codifying a limitation on the for 3(m)(2)(B) violations, NFIB argued portion of the 2020 Tip final rule. The Department’s authority to assess CMPs that it is appropriate for the Department Department will make that that may lack a basis in law. See 86 FR to impose the same limits on the determination in the context of the CMP 15821–22. assessment of CMPs for 3(m)(2)(B) NPRM. After reviewing the comments on the violations as its imposes for CMPs for 2. CMPs for Willful Violations Partial Delay NPRM, the Department section 6 and 7 violations. However, believes that there are strong grounds section 16(e)(2) explicitly limits the The second portion of the 2020 Tip for engaging in further review of the Department’s ability to assess CMPs for final rule that the Department proposed portion of the 2020 Tip final rule that section 6 and 7 violations to those that to further delay made revisions to those addressed the assessment of CMPs for are ‘‘repeated and willful’’; the parts of the Department’s FLSA violations of section 3(m)(2)(B) before it Department’s existing CMP regulations regulations at §§ 578.3(c) and 579.2 goes into effect. In the Partial Delay in 29 CFR parts 578, 579, and 580 reflect which address when a violation of the NPRM and the CMP NPRM, the this statutory limitation. Section 16(e)(2) FLSA is ‘‘willful.’’ As discussed above, Department identified serious legal and contains no such limitation on the section 16(e)(2) of the FLSA authorizes policy concerns with this portion of the assessment of CMPs for violations of the Department to assess a CMP against rule, namely, that it may section 3(m)(2)(B); to the contrary, it ‘‘any person who repeatedly or willfully inappropriately and unlawfully explicitly provides the Secretary violates’’ sections 6 and 7 of the FLSA, circumscribe the Department’s discretion to assess CMPs for violations the Act’s minimum wage and overtime discretion to assess CMPs when of section 3(m)(2)(B) ‘‘as the Secretary requirements. 29 U.S.C. 216(e)(2). The employers unlawfully keep employees’ determines appropriate.’’ regulations interpreting these statutory tips. These concerns are reflected in The Department had concluded in the terms are intended to implement the comments submitted from the AGs and 2020 Tip final rule that a desire for Supreme Court’s opinion in McLaughlin the numerous employee advocacy consistent enforcement procedures v. Richland Shoe Co., 486 U.S. 128, 133 organizations that supported further justified limiting the Department’s (1988), which held that a violation is delay of this portion of the 2020 Tip assessment of CMPs for violations of willful if the employer ‘‘knew or final rule. These commenters argued 3(m)(2)(B) to the same extent as other showed reckless disregard’’ for whether that this portion of the 2020 Tip final FLSA CMPs. See 85 FR 86773. However, its conduct was prohibited by the FLSA. rule, by limiting the assessment of CMPs in light of the comments it has received The regulations provide that WHD shall to willful and repeated violations of in support of the Partial Delay NPRM, take into account ‘‘[a]ll of the facts and section 3(m)(2)(B), is in conflict with the the Department has serious concerns circumstances surrounding the plain statutory language of the FLSA that codifying such a limit on the violation’’ when determining whether a providing that the Secretary may assess assessment of CMPs for violations of violation is willful. See 29 CFR CMPs under this section ‘‘as the section 3(m)(2)(B) in its regulations may 578.3(c)(1), 579.2. From 1992 until the Secretary determines appropriate,’’ and fail to preserve what NFIB has Department issued the 2020 Tip final thus explicitly provides the Secretary appropriately characterized as the rule, the Department’s CMP regulations with discretion to assess those CMPs. Department’s ‘‘wide discretion’’ under at §§ 578.3(c)(2) and 579.2 provided that See, e.g., NWLC; ROC United; OFW; the statute. The Department is therefore ‘‘an employer’s conduct shall be CLASP. As the AGs explained in their finalizing the delay of this portion of the deemed knowing, among other comment, the Pennsylvania complaint rule as proposed. Delaying the effective situations, if the employer received alleges that ‘‘[t]he Department’s decision date of this portion of the 2020 Tip final advice from a responsible official of to require a willful violation of Section rule will provide the Department [WHD] to the effect that the conduct in 203(m)(2)(B) to impose civil money sufficient time to complete its question is not lawful.’’ Sections

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578.3(c)(3) and 579.2 also provided that with the Supreme Court’s decision in employer’s failure to inquire further into ‘‘an employer’s conduct shall be Richland Shoe and to prevent confusion the lawfulness of its conduct when it deemed to be in reckless disregard of and uncertainty among the regulated should have does not constitute reckless the requirements of the Act, among community regarding what constitutes a disregard, and therefore, willfulness; its other situations, if the employer should ‘‘willful’’ violation. As the Department concern that the 2020 Tip final rule’s have inquired further into whether its noted in the Partial Delay NPRM, the revisions to § 578.3(c)(2) and the conduct was in compliance with the Pennsylvania litigants argued that this corresponding language in § 579.2 Act, and failed to make adequate further portion of the 2020 Tip final rule is erroneously suggested that only an inquiry.’’ However, courts of appeals contrary to law because it ‘‘removes an employer’s receipt of advice from WHD, considering those regulations concluded employer’s failure to inquire further into and no other circumstances, can that there is an ‘‘incongruity’’ between, whether its conduct was in compliance demonstrate that a violation of the FLSA on the one hand, the regulatory with the Act from the Department’s was knowing; and its concern that provisions deeming two specific description of willfulness,’’ further revisions are needed to align circumstances to be willful, and on the ‘‘contradict[ing] the Supreme Court’s these regulations with relevant Supreme other hand, ‘‘the Richland Shoe long-established definition of Court precedent. Comments from the standard on which the regulation is willfulness.’’ See Delay NPRM (citing AGs and employee advocacy based.’’ Baystate Alternative Staffing, Commonwealth of Pennsylvania et al. v. organizations confirmed and reinforced Inc. v. Herman, 163 F.3d 668, 680–81 Scalia et al., No. 2:21–cv–00258, pp. these concerns. Regarding the deletion (1st Cir. 1998); see also Rhea Lana, Inc. 23–24, 94 (E.D. Pa., Jan. 19, 2021). The of language regarding reckless disregard, v. Dep’t of Labor, 824 F.3d 1023, 1030– Department proposed that delaying the for instance, the AGs noted that 32 (D.C. Cir. 2016). portion of the 2020 Tip final rule ‘‘[c]urrently, a violation is considered The 2020 Tip final rule revised the addressing the assessment of CMPs for willful when the Department provides ‘‘willful’’ portions of the Department’s willful violations until after the advice to an employer that it chooses CMP regulations to attempt to address Department completes its review of this not to follow or when an employer fails these courts of appeals decisions. The portion of the rule would avoid to inquire adequately into its legal 2020 Tip final rule revised § 578.3(c)(2) codifying into the Department’s obligations in some circumstances. and the corresponding language in regulations provisions that, absent However, if the 2020 Final Tip Rule § 579.2 to state that, in considering all reconsideration by the Department, may takes effect, these actions would no of the facts and circumstances, an not survive judicial scrutiny. longer be considered willful and subject employer’s receipt of advice from WHD In its CMP NPRM, the Department to civil money penalties.’’ Numerous that its conduct was unlawful ‘‘can be stated that it continued to believe that advocacy organizations also asserted sufficient’’ to show that the violation is revisions to its 1992 regulations that these changes weaken worker willful but is ‘‘not automatically addressing the meaning of willfulness protections under the FLSA. See, e.g., dispositive.’’ However, the 2020 Tip were needed in order to address the NELP; Oxfam America; Justice at Work. final rule also deleted § 578.3(c)(3) and courts of appeals decisions discussed the corresponding language in § 579.2 above. However, the Department asked NFIB opposed the proposed delay in addressing the meaning of reckless for comment on whether modifications the portion of the 2020 Tip final rule disregard.17 The 2020 Tip final rule to this portion of the 2020 Tip final rule addressing the assessment of CMPs for explained that an employer who should were needed to clarify that multiple willful violations, which it have inquired further but did not do so circumstances, not just the circumstance characterized as ‘‘reasonable’’ and adequately is a specific scenario that identified, can be sufficient to show that ‘‘practical.’’ CWC also expressed courts have already determined is a violation was knowing and thus support for this portion of the rule in its equivalent to reckless disregard, rather willful. See 86 FR 15822. The prior comments. In its comment on the than a fact that could impact a Department also asked for comment on Delay Rule, for instance, CWC determination of willfulness. 85 FR whether the 2020 Tip final rule commended the Department for 86774. The 2020 Tip final rule stated inappropriately deleted the language at bringing its regulations regarding the that because such a scenario was not a § 578.3(c)(3) and the corresponding meaning of willfulness ‘‘more closely’’ ‘‘fact’’ or ‘‘circumstance’’ that the language at § 579.2 addressing reckless in line with appellate court precedent, Department should consider when disregard. Accordingly, the CMP NPRM specifically Baystate Alternative determining reckless disregard, it was proposed withdrawing and reproposing Staffing v. Herman, 163 F.3d 668 (1st not appropriate to include it in the the portion of the 2020 Tip final rule Cir. 1998). As noted above, the NRA regulations. Id. Accordingly, the 2020 addressing the meaning of willfulness; contended that the Pennsylvania Tip final rule stated that revising the CMP NPRM also proposed language litigants’ legal challenge does not § 578.3(c)(3) in the same manner as addressing the meaning of reckless support delaying the 2020 Tip final rule, § 578.3(c)(2) ‘‘did not seem helpful’’ and disregard. as no court has ruled on any aspect of deleted that provision. Id. After reviewing the comments on the the complaint, and NRF expressed In the Partial Delay NPRM, the Partial Delay NPRM, the Department has general opposition to delaying the rule. Department proposed to further delay decided to finalize the delay of the As explained above, however, the the effective date of this portion of the portion of the 2020 Tip final rule Department has serious concerns that 2020 Tip final rule while it completes addressing the meaning of willfulness as this portion of the 2020 Tip final rule its review of this portion of the rule to proposed. As with the portion of the does not align with the Supreme Court’s ensure that the new regulations comport 2020 Tip final rule addressing CMPs for decision in Richland Shoe. violations of section 3(m)(2)(B), the Additionally, comments from the AGs 17 As noted above, § 578.3(c)(3) and the Department has identified multiple and advocacy groups illustrate, at a corresponding language in § 579.2 had provided, serious concerns with this portion of the minimum, that the 2020 Tip final rule’s ‘‘[A]n employer’s conduct shall be deemed to be in rule. These include the Department’s revisions to these CMP provisions have reckless disregard, among other situations, if the caused confusion about the employer should have inquired further into concern that removing § 578.3(c)(3) and whether its conduct was in compliance with the the corresponding language in § 579.2 Department’s changes to those Act, and failed to make adequate further inquiry.’’ could inadvertently suggest that an provisions. Accordingly, the

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Department concludes that the portion unless the time spent in such duties Pennsylvania complaint challenges the of the 2020 Tip final rule addressing the exceeded 20 percent of the employee’s dual jobs test in the 2020 Tip final rule, assessment of CMPs for willful workweek (80/20 guidance). In 2018 which largely codifies this guidance, violations raises serious legal and policy and 2019, the Department changed its under the APA. The Pennsylvania concerns that merit further review by subregulatory guidance to provide that litigants who brought the complaint the Department. employers could continue to take a tip argue that the 2020 Tip final rule’s dual By delaying the effective date of this credit for any non-tipped work that a jobs test—which also limits the tip portion of the 2020 Tip final rule to tipped employee performed which was credit to non-tipped related duties allow sufficient time to undertake a related to his or her tipped occupation, performed ‘‘contemporaneously with’’ comprehensive review of this portion of provided that work was performed or for a ‘‘reasonable time immediately the rule, the Department will be able to ‘‘contemporaneously with’’ or ‘‘for a before or after’’ performing tipped evaluate the concerns discussed above reasonable time immediately before or duties—relies on ‘‘ill-defined’’ terms before it goes into effect. The notice- after’’ his or her tipped work. The and fails to ‘‘provide any guidance as to and-comment process associated with Department’s guidance provided that when—or whether—a worker could be the Department’s CMP NPRM, in which employers could use O*NET, which is deemed a dual employee during a shift it has proposed withdrawing and a database of worker attributes and job or how long before or after a shift reproposing this portion of the rule, will characteristics compiled by the constitutes a reasonable time.’’ 86 FR be integral to this review. The Employment and Training 15811.21 Additionally, the Pennsylvania Department also believes that delaying Administration, to determine whether a litigants challenged the 2020 Tip final this portion of the rule while it duty was related or not related to the rule’s use of O*NET as a resource to undertakes its review will prevent tipped occupation. See WHD Field determine ‘‘related duties,’’ which, confusion and uncertainty among Assistance Bulletin (FAB) 2019–2 (Feb. according to their complaint, authorizes employers and workers regarding the 15, 2019) and WHD Opinion Letter employers to engage in ‘‘conduct that definition of willfulness. As the FLSA2018–27 (Nov. 8, 2018) (2018–19 has been prohibited under the FLSA for comments from the AGs and advocacy guidance). In 2019, the Department decades.’’ 22 Given the concerns noted organizations demonstrate, such proposed to amend its existing dual jobs with this portion of the rule, the confusion is likely to be caused, in regulations at § 531.56(e) 19 to Department asked for comment on particular, by the 2020 Tip final rule’s incorporate this guidance. See 84 FR whether it should further delay the dual removal of language regarding the 53956. The 2020 Tip final rule largely jobs portion of the 2020 Tip final rule meaning of reckless disregard from codified the 2018–19 guidance; the to consider concerns raised in the § 578.3(c) and § 579.2. primary difference between the 2018–19 Pennsylvania litigation as well as other The Department thus finalizes the guidance and the 2020 Tip final rule is aspects of that portion of the proposed delay in the portion of the that the final rule only used O*NET as rulemaking, such as the validity of the 2020 Tip final rule addressing the a guide for determining related duties, economic analysis, and asked for meaning of willfulness. The Department rather than as a definitive source. See 85 notes that, upon review of the FR 86S756, 86790. 2019) (same); Roberson v. Tex. Roadhouse Mgmt. comments it receives on the CMP As the Department explained in the Corp., No. 19–628, 2020 WL 7265860 (W.D. Ky. NPRM, which proposes to withdraw Partial Delay NPRM, a number of Dec. 10, 2020) (same). 21 See Commonwealth of Pennsylvania et al. v. and re-propose this portion of the rule, district courts have found that the test Scalia et al., No. 2:21-cv-00258, p. 128, 131 (E.D. it may determine that it is not in the 2018–2019 guidance for when an Pa., Jan. 19, 2021); see also id. at p. 129 (‘‘The appropriate to withdraw or amend this employer can take a tip credit for a Department never provides a precise definition of tipped employee who performs related ‘contemporaneous,’ simply stating that it means portion of the 2020 Tip final rule. The ‘during the same time as’’ before making the caveat Department will make that non-tipped duties—limiting the tip that it ‘‘does not necessarily mean that the determination in the context of the CMP credit to non-tipped related duties employee must perform tipped and non-tipped NPRM. performed ‘‘contemporaneously with’’ duties at the exact same moment in time.’’’) or for a ‘‘reasonable time immediately 22 See Commonwealth of Pennsylvania et al. v. 3. Dual Jobs Regulations Scalia et al., No. 2:21-cv-00258, p. 115 (E.D. Pa., before or after’’ performing tipped Jan. 19, 2021) (‘‘Because it seeks to describe the The third portion of the 2020 Tip final duties—is unclear or have otherwise work world as it is, not as it should be, O*NET rule that the Department proposed to refused to follow the test set forth in cannot and does not account for FLSA violations in further delay involves the amendment that guidance.20 Additionally, the industries known to have high violation rates like the restaurant industry; therefore, using it to of its ‘‘dual jobs’’ regulations to address determine related duties will sanction conduct that when an employer can continue to take 19 See also 29 CFR 10.28(b)(2). has been prohibited under the FLSA for decades.’’); a tip credit for an employee who is 20 The preamble to the 2020 Tip final rule lists id. at p. 117 (‘‘O*NET tasks for waiters and engaged in a tipped occupation and many of these decisions. See 85 FR 86770–71. For waitresses include ‘cleaning duties, such as example, a district court stated that the 2018 DOL sweeping and mopping floors, vacuuming carpet, performs both tipped and non-tipped guidance ‘‘inserts new uncertainty and ambiguity tidying up server station, taking out trash, or duties, see § 531.56(e).18 For many into the analysis’’ and noted that the Department checking and cleaning bathrooms’—when from years, the Department’s subregulatory ‘‘fails to explain how long a ‘reasonable time’ would 1988 until 2018, the Department’s Field Operations guidance addressing this issue be, or what is meant by performing non-tipped Handbook specified as an example, ‘maintenance work ‘contemporaneously’ with tipped work.’’ work (e.g., cleaning bathrooms and washing permitted employers to continue to take Flores v. HMS Host Corp., No. 18–3312, 2019 WL windows) [is] not related to the tipped occupation a tip credit for the time a tipped 5454647 (D. Md. Oct. 23, 2019). District courts have of a server; such jobs are non-tipped employee performed non-tipped duties also found that the Department’s guidance occupations.’’’). Some district courts have levied related to his or her tipped occupation contradicts the limitations (‘‘occasionally,’’ ‘‘part of similar criticism against the use of O*NET to [the] time,’’ and ‘‘takes a turn’’) that remain in the perform this test. See, e.g., O’Neal v. Denn-Ohio, Dual Jobs regulation. For example, in Belt v. P.F. LLC, No. 19–280, 2020 WL 210801 at *7 (N.D. Ohio 18 See also 29 CFR 10.28(b)(2) (incorporating the Chang’s China Bistro, Inc., 401 F. Supp. 3d 512, 533 Jan. 14, 2020) (declining to defer to the 2018 same guidance on when an employer can continue (E.D. Pa. 2019), the district court held that the dual guidance in part because O*NET relies in part on to take an FLSA tip credit for an employee who is jobs guidance was unreasonable because ‘‘the data obtained by asking employees which tasks engaged in a tipped occupation and performs both temporal limitations it imposes on untipped related their employers assign them to perform, which tipped and non-tipped duties in the Department’s work conflict with those in the text of the Dual Jobs ‘‘would allow employers to ‘‘re-write the regulation regulations relating to Executive Order 13658, regulation.’’ See also Berger v. Perry’s Steakhouse without going through the normal rule-making ‘‘Establishing a Minimum Wage for Contractors’’). of Ill., LLC, 430 F. Supp. 3d 397, 411–12 (N.D. Ill. process,’’ and is therefore unreasonable).

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comments generally addressing the occupation under the FLSA. The further delay argued that the 2020 Tip merits of the 2020 Tip final rule dual Department is also concerned that the final rule contained a number of jobs test. The Department asked whether 2020 Tip final rule’s dual jobs amorphous terms, such as further delaying the effective date of this regulations may be contrary to the ‘‘contemporaneous’’ and ‘‘reasonable portion of the 2020 Tip final rule so that prohibition on keeping tips in section time’’, that may not be sufficiently it could fully consider the merits of 3(m)(2)(B) of the statute because it defined, a defect that could lead to these claims and consider whether to increases employers’ ability to use tips extensive litigation over the scope of engage in further rulemaking on this to satisfy their minimum wage those terms. The Department agrees that issue might be prudent before it codified obligations. it should at a minimum consider the such a test into its regulations for the The NRA and WPI comments support argument that these terms are not first time. The Department noted that it permitting the dual jobs portion of the adequately defined. The Department would be disruptive to employers to 2020 Tip final rule to go into effect, also agrees with the commenters that it adjust their practices to accommodate arguing that it would be inappropriate should further delay the rule so that it the dual jobs test articulated in the 2020 to revert back to the Department’s can review the numerous court Tip final rule and then have to readjust previous 80/20 guidance because the decisions which declined to defer to the if that test does not survive judicial FLSA only refers to employees being Department’s 2018–2019 guidance, scrutiny or if the Department decides to employed in a ‘‘tipped occupation’’ and which was the basis for the dual jobs propose a new dual jobs test. The therefore does not create any distinction test included in the 2020 Tip final rule, Department proposed that delaying the between the tipped and non-tipped to determine whether those decisions effective date while the Department duties of a tipped employee.23 The identify any weaknesses in the 2020 Tip undertakes its review, instead of Department is not proposing in this final rule dual jobs test. The Department allowing this portion of the 2020 Tip Partial Delay rulemaking to revert back also shares the concerns of the final rule to be implemented, addresses to its 80/20 guidance. It notes, however, commenters that O*NET may not be an this concern before employers change that the NRA and WPI reading of the appropriate tool to identify duties their practices to accommodate a dual statute is inconsistent with the position related to tipped occupations. As the jobs test that ultimately may not survive taken by the Department in the 2020 Tip commenters pointed out, since O*NET judicial scrutiny or that the Department final rule, which determines whether an compiles lists of duties that correspond may change. employee is engaged in a tipped to various occupations and is generated After carefully considering the occupation based on the employees’ through employee surveys, it reflects the comments received, the Department has duties.24 Particularly because this duties that tipped employees are concluded that the dual jobs portion of portion of the rule is being challenged performing, rather than the duties they the 2020 Tip final rule raises legal and under the APA and may not survive should be performing.25 policy concerns that warrant further judicial scrutiny, the Department The Department also shares delay of the effective date of this portion believes it should further delay the commenters’ concerns with the process of the rule while the Department effective date of this portion of the rule. by which the Department promulgated considers these issues and conducts This will ensure that it has the the dual jobs portion of the 2020 Tip another rulemaking to potentially revise opportunity to thoroughly consider final rule, specifically, that the that portion of the rule. The Department commenters’ concerns that the dual jobs economic analysis may not have received a number of significant portion of the 2020 Tip final rule is adequately estimated the impact of this comments in support of further contrary to the FLSA, and propose and portion of the rule. In particular, the extension of the effective date of the complete a new rulemaking on this Department is concerned that its dual jobs portion of the rule. These issue, before the rule goes into effect. analysis of the economic impact of the comments raised concerns similar to A number of commenters encouraged dual jobs portion of the 2020 Tip final those raised in the Pennsylvania the Department to allow the dual jobs rule failed to adequately address EPI’s litigation: that the new dual jobs test portion of the 2020 Tip final rule to go comment on the rule, and that alleged sets too lax a standard and will depress into effect because the new test, which flaws in its economic analysis call into tipped employees’ wages and possibly eliminates the 20 percent limitation on question whether this portion of the rule eliminate non-tipped jobs, that the new related duties and uses O*NET as a was the product of reasoned decision test does not reflect the statutory resource for determining which duties making. The NRA argued in its definition of a tipped employee, that the are related to the tipped occupation, comment opposing an additional delay terms used in the new test are so makes compliance easier for employers. of the effective date that EPI’s economic amorphous that they will lead to WPI and the NRA, for example, stated analysis of the dual jobs portion of the extensive litigation, that O*NET is not that the revisions to § 531.56(e) created 2020 Tip final rule was flawed because an appropriate tool to determine related a standard that is not as susceptible to it used the wrong baseline. 26 However, duties, and that the Department’s litigation as the previous 80/20 economic analysis for this portion of the guidance. On the other hand, a number 25 As noted above, the NRA’s comment opposing rule did not sufficiently identify the the further delay stated as a general matter that the of commenters who supported the Pennsylvania complaint does not support a delay of economic impact of this new test on the 2020 Tip final rule. However, the Department employees and employers. 23 NRF also expressed general support for the believes that the concerns raised by commenters The Department shares the concerns 2020 Tip final rule’s related non-tipped duties test, with both the substance of the dual jobs portion of of the commenters who supported the characterizing it as a ‘‘balanced approach.’’ the rule and the process by which it was Partial Delay NPRM that, by removing 24 Specifically, revised § 531.56(e) distinguishes promulgated—which mirror those raised in the between tipped employees’ tipped duties, for which Pennsylvania complaint—are sufficiently the limit on the amount of time a tipped employers can take a tip credit; non-tipped duties persuasive to warrant further delaying this portion employee can perform related non- related to a tipped employee’s occupation, which of the rule. tipped duties, the new test articulated in employers can take a tip credit for when they are 26 The NRA comment also asserts that the the 2020 Tip final rule may not performed contemporaneously or for a reasonable Department ‘‘agreed not to assert such a limitation amount of time immediately before or after in pending and future investigations in response to accurately identify when a tipped performing tipped duties; and non-tipped duties litigation filed against the Department of Labor in employee who is performing non-tipped that are not part of a tipped employee’s occupation, federal court in Texas.’’ In support, the NRA duties is still engaged in a tipped for which employers cannot take a tip credit. comment cites a Notice of Dismissal, filed in

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the Department believes that the reconsider the dual jobs portion of the evaluate commenters’ concerns, and criticisms raised by EPI are sufficiently 2020 Tip final rule because the consider whether to propose serious to warrant further review, even Department has already conducted a withdrawing and reproposing the third if the Department ultimately concludes rulemaking to consider this issue and portion of the rule addressing dual jobs. that it used the correct baseline. Given that it would be disruptive to employers The Department also noted that the the Department’s concern that its to further delay implementation of the CMP NPRM includes a 60-day comment economic analysis of the dual jobs new rule. The NRA argues that period and that a final CMP rule would portion of the 2020 Tip final rule may employers have already implemented have at least a 30-day delay between not be sufficient, the Department also the dual jobs portion of the 2020 Tip publication in the Federal Register and shares EPI’s concern, reiterated by final rule because they changed their its effective date.28 The Department numerous advocacy organizations, that practices to follow the Department’s solicited comments on whether the allowing this portion of the rule to go 2018–2019 dual jobs guidance. proposed period of delay is an into effect without further consideration However, as WPI acknowledged, a appropriate length of time. of the economic analysis could number of courts have declined to The Department received one potentially lead to a loss of income for follow the Department’s 2018–19 comment specifically addressing the workers in tipped industries, many of guidance and have decided instead to length of the proposed delay. The AGs whom are continuing to struggle with adopt the Department’s prior 80/20 stated that the length of the delay was the economic impact of the COVID–19 guidance. Therefore, some employers appropriate because it gives the pandemic. 27 Further delay of this have not applied the 2020 Tip final rule Department sufficient time ‘‘to complete portion of the rule would also allow the dual jobs test. Also, as explained above, the rulemaking process and will avoid Department to consider any changes the 2020 Tip final rule was based on the multiple rulemakings and delays,’’ to from the COVID–19 pandemic to tipped 2018–19 guidance but is not identical to ‘‘consider and review’’ all the issues work that should inform its ongoing it. As also noted above, the Department raised by the portion of the 2020 Tip consideration of the dual jobs portion of believes that the concerns raised by the final rule addressing the Department’s the rule. commenters that the dual jobs test lacks dual jobs regulations, and ‘‘to complete In sum, the Department believes that legal sufficiency should be explored the rulemaking process should it decide the proposed delay of the dual jobs before the dual jobs test is codified for to withdraw or revise’’ the portion of the portions of the 2020 Tip final rule the first time into the Department’s 2020 Tip final rule addressing dual jobs. through December 31, 2021, is regulations and that it would be more As noted above, seventeen advocacy reasonable given the numerous issues of disruptive to employers if the rule went organizations supported the Partial law, policy, and fact raised by the into effect only to be invalidated in the Delay NPRM and five organizations comments, which reflect very serious Pennsylvania litigation. The Department opposed it. concerns with the substance of the dual also believes that it is significant that a After carefully reviewing the jobs portion of the 2020 Tip final rule number of commenters, including EPI, comments received, and based on its and the process through which it was NELP, and WPI have urged the extensive rulemaking experience, the promulgated. While an 8-month delay is Department to consider whether the Department concludes that the proposed significant, the Department believes that dual jobs test could be strengthened, 8-month delay provides it with allowing this portion of the rule to go both in terms of employee protection sufficient time to complete its into effect may lead to harm to the and in workability. The Department will comprehensive review of these three Department, workers, and employers if consider the specific recommendations portions of the 2020 Tip final rule, the rule is ultimately invalidated. The made by commenters such as WPI and which will allow the Department to Department appreciates the NRA’s EPI as part of its ongoing review of the complete the CMP rulemaking as well as comment that there is no need to dual jobs portion of the 2020 Tip final a separate rulemaking to potentially rule. revise the dual jobs portions of the 2020 Restaurant Law Center v. Acosta, No. 1:18–cv– In sum, after considering the Tip final rule. Accordingly, the 00567–RP (W.D. Tex. Nov. 30, 2018), a case that comments submitted, the Department challenged a prior, now superseded, interpretation Department finalizes the proposed 8- reflected then in Section 30d00(f). The Department believes that further delay is essential to month delay in these three portions of disagrees that the November 30, 2018, Notice of inform the Department’s comprehensive the 2020 Tip final rule. Dismissal limits its ability to reconsider this portion review of the dual jobs portion of the of the December 30, 2020 Tip final rule. Under the 2020 Tip final rule, including 5. Effective Date of This Partial Delay terms of that dismissal, the parties stipulated that Opinion Letter FLSA 2018–27 ‘‘resolve[d] the case conducting a rulemaking to potentially This rule delaying the effective date of or controversy underlying the Complaint,’’ and that revise that portion of the rule. the two portions of the 2020 Tip final WHD would ‘‘instruct its staff, as a matter of enforcement policy, not to enforce the superseded 4. Length of the Proposed Delay rule addressing the assessment of CMPs and the portion of the 2020 Tip final interpretation’’ in the Department’s prior guidance In the Partial Delay NPRM, the ‘‘with respect to work performed prior to the rule addressing the Department’s dual Department proposed delaying the issuance of the Opinion Letter.’’ Notice of jobs regulations is effective Dismissal, Restaurant Law Center v. Acosta, No. effective date of three portions of the immediately.29 1:18–cv–00567–RP (W.D. Tex. Nov. 30, 2018). The 2020 Tip final rule—the two portions Section 553(d) of the Department did not agree in that prior litigation to relating to the assessment of CMPs and APA, 5 U.S.C. 553(d), provides that constrain either its ability to reconsider its guidance the portion that revised the publication of a substantive rule must or engage in future rulemaking on this issue. Id. be made no less than 30 days before its 27 Numerous commenters, both those who Department’s dual jobs regulations—for supported and those who opposed the Partial Delay an additional 8 months, through 28 The APA generally requires agencies to publish NPRM, noted that the COVID–19 pandemic has had December 31, 2021. See 86 FR 15812. a particularly serious impact on the restaurant substantive rules ‘‘not less than 30 days before industry and tipped workers. See. e.g., OFW (noting The Department proposed that this [their] effective date.’’ 5 U.S.C. 553(d). that ‘‘in the midst of the COVID–19 economic additional delay would provide it with 29 The amendments made to 29 CFR 10.28(b)(2), crisis’’ tipped workers ‘‘have already seen their tips sufficient time to consider all aspects of 531.56(e), 578.1, 578.3, 578.4, 579.1, 579.2, 580.2, plummet’’); NRA (‘‘It is important to highlight the these three portions of the rule, conduct 580.3, 580.12, and 580.18, revised at 85 FR 86756 fact that the restaurant industry has been uniquely (December 30, 2020), and delayed at 86 FR 11632 hurt by the pandemic. No industry has lost more rulemaking on two portions of the 2020 (February 26, 2021) until April 30, 2021, are further jobs or more revenue.’’). Tip final rule through the CMP NPRM, delayed until December 31, 2021.

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effective date except, among other environment, public health or safety, or date extension, which extended the exceptions, ‘‘as otherwise provided by state, local or tribal governments or effective date of the 2020 Tip final rule the agency for good cause found.’’ The communities (also referred to as to April 30, 2021. See 86 FR 11632. Department finds that it has good cause economically significant); (2) create In March 2018, Congress amended to make this rule effective immediately serious inconsistency or otherwise section 3(m) and sections 16(b), (c), and upon publication because allowing for a interfere with an action taken or (e) of the FLSA to prohibit employers 30-day delay between publication and planned by another agency; (3) from keeping their employees’ tips, to the effective date of this rule would materially alter the budgetary impact of permit recovery of tips that an employer result in the three portions of the 2020 entitlements, grants, user fees or loan unlawfully keeps, and to suspend the Tip final rule that this rule delays taking programs or the rights and obligations of operations of the portions of the 2011 effect before the delay begins. Such an recipients thereof; or (4) raise novel final rule that restricted tip pooling outcome would undermine the purpose legal or policy issues arising out of legal when employers do not take a tip credit. for which this rule is being promulgated mandates, the President’s priorities, or In the economic analysis of the 2020 Tip and result in additional confusion for the principles set forth in the Executive final rule, the Department quantified regulated entities. Moreover, this Order. OIRA has determined that this transfer payments that could occur rulemaking institutes an 8-month delay delay is not economically significant when employers institute non- of portions of the 2020 Tip final rule, under section 3(f) of Executive Order traditional tip pools. Because these rather than itself imposing any new 12866. transfers have already been quantified, compliance obligations on employers; Executive Order 13563 directs and the provision regarding tip pooling therefore, the Department finds that a agencies to, among other things, propose will go into effect on April 30, 2021, this lapse between publication and the or adopt a regulation only upon a delay will not have any impact on these effective date of this rule delaying the reasoned determination that its benefits quantified transfers. Tip final rule’s effective date is justify its costs; that it is tailored to The Department expects that the unnecessary. Because allowing for a 30- impose the least burden on society, industries that may be affected by the day period between publication and the consistent with obtaining the regulatory delay are those that were acknowledged effective date of this rulemaking is both objectives; and that, in choosing among to have tipped workers in the 2020 Tip unnecessary and would fundamentally alternative regulatory approaches, the final rule. These industries are classified undermine the purpose for which this agency has selected those approaches under the North American Industry rule is being promulgated, this final rule that maximize net benefits. Executive Classification System (NAICS) as delaying the effective date of three Order 13563 recognizes that some costs 713210 (Casinos), 721110 (Hotels and portions of the 2020 Tip final rule is and benefits are difficult to quantify and Motels), 722410 (Drinking Places effective immediately upon publication provides that, when appropriate and (Alcoholic Beverages)), 722511 (Full- in the Federal Register. permitted by law, agencies may service Restaurants), 722513 (Limited III. Paperwork Reduction Act consider and discuss qualitatively Service Restaurants), and 722515 (Snack values that are difficult or impossible to and Nonalcoholic Beverage Bars). The The Paperwork Reduction Act of 1995 quantify, including equity, human 2017 data from the Statistics of US (PRA), 44 U.S.C. 3501 et seq., and its dignity, fairness, and distributive Businesses (SUSB) reports that these attendant Regulations, 5 CFR part 1320, impacts. The analysis below outlines industries have 503,915 private firms require the Department to consider the the impacts that the Department and 661,198 private establishments.34 agency’s need for its information anticipates may result from this delay The Department acknowledges that collections, their practical utility, as and was prepared pursuant to the there are other industries with tipped well as the impact of paperwork and above-mentioned executive orders. workers that would have been affected other information collection burdens In this rule, the Department will by the 2020 Tip final rule. imposed on the public, and how to further extend the effective date of three Part of the reason for an additional minimize those burdens. This final rule portions of the 2020 Tip final rule in delay of the effective date is for the does not contain a collection of order to engage in a comprehensive Department to conduct rulemaking on information subject to OMB approval review of the issues of law, fact, and this portion of the rule that amended the under the Paperwork Reduction Act. policy raised by these three portions of Department’s dual jobs regulations to IV. Executive Order 12866, Regulatory the 2020 Tip final rule and to take address the application of the FLSA tip Planning and Review; and Executive further action, as needed, to complete credit to tipped employees who perform Order 13563, Improved Regulation and its review. This delay will provide the both tipped and non-tipped duties. In Regulatory Review Department additional time to complete the 2020 Tip final rule, the Department the CMP rulemaking and as well as an amended its dual jobs regulations to Under Executive Order 12866, OMB’s additional rulemaking on the portion of Office of Information and Regulatory largely codify WHD’s recent guidance the 2020 Tip final rule that addressed regarding when an employer can take a Affairs (OIRA) determines whether a the application of the FLSA’s tip credit regulatory action is significant and, tip credit for hours that a tipped provision to tipped employees who employee performs non-tipped duties therefore, subject to the requirements of perform both tipped and non-tipped the Executive Order and OMB review.30 related to his or her occupation, which duties. The remainder of the 2020 Tip replaced the 20 percent limitation on Section 3(f) of Executive Order 12866 final rule, including portions that defines a ‘‘significant regulatory action’’ related non-tipped duties with an addressed the keeping of tips and tip updated related duties test. The as a regulatory action that is likely to pooling, 31 recordkeeping, 32 and other result in a rule that may: (1) Have an Department provided a qualitative minor changes 33 will become effective analysis of this change, and stated that annual effect on the economy of $100 upon the expiration of the first effective million or more, or adversely affect in the removal of a 20 percent limitation a material way a sector of the economy, 31 29 CFR 10.28(c), (e)–(f); 531.50–.52, 531.54. 34 Statistics of U.S. Businesses 2017, https:// productivity, competition, jobs, the 32 29 CFR 516.28(b). www.census.gov/data/tables/2017/econ/susb/2017- 33 29 CFR 531.50, 531.51, 531.52, 531.55, susb-annual.html, 2016 SUSB Annual Data Tables 30 See 58 FR 51735, 51741 (Oct. 4, 1993). 531.56(a), 531.56(c)–(d), 531.59, and 531.60. by Establishment Industry.

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on tasks that are not directly tied to needed to evaluate the Department’s V. Regulatory Flexibility Act (RFA) receipt of a tip may result in tipped dual jobs regulations, including how the Analysis workers such as wait staff and changes brought about by COVID–19 bartenders performing more related non- would impact the proposal. The Regulatory Flexibility Act of 1980 tipped duties.35 The Department (RFA), 5 U.S.C. 601 et seq., as amended Sixteen commenters agreed with EPI’s by the Small Business Regulatory acknowledged that one outcome could analysis of the impact of the changes to be that employment of workers Enforcement Fairness Act of 1996, the dual jobs regulations, and many Public Law 104–121 (1996), requires currently performing these duties may asserted that the rule would harm fall, and that tipped workers might lose federal agencies engaged in rulemaking women and people of color, both of tipped income by spending more of to consider the impact of their proposals whom are disproportionately their time performing duties where they on small entities, consider alternatives represented in the tipped workforce. are not earning tips, while still receiving to minimize that impact, and solicit The NRA disagreed with this analysis, cash wages of less than the full public comment on their analyses. The minimum wage. The Department also arguing that EPI’s criticism of the 2020 RFA requires the assessment of the stated that eliminating the cost to Tip final rule ‘‘rests on a flawed impact of a regulation on a wide range scrutinize employees’ time to premise—i.e., that current law reflects of small entities, including small demonstrate compliance with the 20 such a quantitative cap.’’ They asserted businesses, not-for-profit organizations, percent limitation would result in costs that the baseline for any analysis of the and small governmental jurisdictions. savings to employers. In the event that 2020 Tip final rule should have been the Accordingly, the Department examined the 2020 Tip final rule’s revisions to the guidance issued by WHD in 2018 and this rule to determine whether it will dual jobs regulations would have led to 2019, which rejects a quantitative limit have a significant economic impact on cost savings for employers, transfers on related non-tipped duties. The a substantial number of small entities. between employees and employers, or Department acknowledges that the The most recent data on private sector transfers among employees, these effects baseline for both EPI’s analysis and the entities at the time this NPRM was will be delayed by this rule. These 2020 Tip final rule measured the change drafted are from the 2017 Statistics of effects may also change after the from before the 2018–19 guidance was U.S. Businesses (SUSB).37 The Department conducts rulemaking on the issued. The Department used this Department limited this analysis to the dual jobs portion of the 2020 Tip final baseline in the 2020 Tip final rule in industries that were acknowledged to rule. order to be transparent about the have tipped workers in the 2020 Tip The effective date delay will allow the economic impact that would occur as a final rule. These industries are classified Department to better consider this result of the 2018–19 guidance and the under the North American Industry 2020 Tip final rule’s changes to the dual provision and determine if there is a Classification System (NAICS) as jobs regulations, which largely codified clearer way to address the application of 713210 (Casinos), 721110 (Hotels and that guidance. However, the Department the FLSA tip credit to tipped employees Motels), 722410 (Drinking Places believes that the criticisms raised by EPI who perform both tipped and non- (Alcoholic Beverages)), 722511 (Full- are sufficiently serious to warrant tipped duties. The delay will also service Restaurants), 722513 (Limited further review, even if the Department provide the Department time to quantify Service Restaurants), and 722515 (Snack ultimately concludes that it used the any impact associated with such a and Nonalcoholic Beverage Bars). The correct baseline. change, if warranted, in the dual jobs SUSB reports that these industries have rulemaking. Commenters raised serious concerns 503,915 private firms and 661,198 Echoing their comment on the NPRM with the economic analysis of the dual private establishments. Of these, for the 2020 Tip final rule, EPI asserted jobs portion of the rule, asserting that 501,322 firms and 554,088 in their comment on this delay that the the Department did not sufficiently removal of the 20 percent limitation establishments have fewer than 500 consider the costs, benefits, and employees. would result in transfers from workers potential transfers of this portion of the to employers of more than $700 million rule. For example, the AGs and NELP The Department has not quantified 36 annually. They also note that this said that the Department’s reluctance to any costs, transfers, or benefits figure was calculated pre-COVID–19, quantitatively estimate the impact of the associated with this delay, and therefore and that the impact on workers would dual jobs portion of the rule and certifies that this rule will not have a be worse during the pandemic. ROC consider the estimates of the rule’s significant economic impact on a United also acknowledged that the impact submitted by EPI and other substantial number of small entities. situation for tipped workers has groups in the course of that rulemaking VI. Unfunded Mandates Reform Act of changed during the pandemic, partly is evidence that the rulemaking was 1995 due to ‘‘the rise in contactless service arbitrary and capricious under the APA. interactions and purchases, along with The Department will consider these The Unfunded Mandates Reform Act growth in app based delivery.’’ They concerns with the 2020 Tip final rule’s of 1995 (UMRA) 38 requires agencies to recommend that the Department’s economic analysis, including whether prepare a written statement for rules analysis take into consideration changes the baseline for the economic analysis of with a federal mandate that may result to workforce and employment practices the dual jobs portion of the 2020 Tip in increased expenditures by state, as a result of the COVID–19 pandemic. final rule was appropriate, in its local, and tribal governments, in the The Department agrees that more time is comprehensive review of the dual jobs aggregate, or by the private sector, of portion of the 2020 Tip final rule. $165 million ($100 million in 1995 35 Examples of such duties are cleaning and dollars adjusted for inflation) or more in setting tables, toasting bread, making coffee, and The Department does not believe that occasionally washing dishes or glasses. the delay in the CMP portions of the 36 Heidi Shierholz and Margaret Poydock, ‘‘EPI 2020 Tip final rule will have an impact 37 Statistics of U.S. Businesses 2017, https:// Comments on the Department of Labor’s Proposed www.census.gov/data/tables/2017/econ/susb/2017- Rule Regarding Tip Regulations,’’ comments on costs or transfers, as these provisions susb-annual.html, 2016 SUSB Annual Data Tables submitted on behalf of Economic Policy Institute to only apply when an employer violates by Establishment Industry. U.S. Department of Labor, December 10, 2019. the FLSA. 38 See 2 U.S.C. 1501.

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at least one year.39 This statement must: SUMMARY: The Coast Guard is making this rule effective less than 30 (1) Identify the authorizing legislation; establishing a temporary safety zone for days after publication in the Federal (2) present the estimated costs and certain navigable waters of the Sabine Register. Delaying the effective date of benefits of the rule and, to the extent River, extending the entire width of the this rule would be impracticable that such estimates are feasible and river, adjacent to the public boat ramp because immediate action is needed to relevant, its estimated effects on the located in Orange, TX. The safety zone respond to the potential safety hazards national economy; (3) summarize and is necessary to protect persons and associated with hazards associated with evaluate state, local, and tribal vessels from hazards associated with a high speed boat races. government input; and (4) identify high-speed boat race competition in III. Legal Authority and Need for Rule reasonable alternatives and select, or Orange, TX. This regulation prohibits explain the non-selection, of the least persons and vessels from being in the The Coast Guard is issuing this rule costly, most cost-effective, or least safety zone unless authorized by the under authority in 46 U.S.C. 70034 burdensome alternative. This rule is not Captain of the Port Marine Safety Unit (previously 33 U.S.C. 1231). The expected to result in increased Port Arthur or a designated Captain of the Port Port Arthur (COTP) expenditures by the private sector or by representative. has determined that potential hazards associated with high speed boat races state, local, and tribal governments of DATES: This rule is effective from 8:30 $165 million or more in any one year. will be a safety concern for spectator a.m. through 6 p.m. on May 22, 2021 craft and vessels in the vicinity of these VII. Executive Order 13132, Federalism and May 23, 2021. race events. The purpose of this rule is The Department has (1) reviewed this ADDRESSES: To view documents to ensure safety of vessels and the delay in accordance with Executive mentioned in this preamble as being navigable waters in the safety zone Order 13132 regarding federalism and available in the docket, go to https:// before, during, and after the scheduled (2) determined that it does not have www.regulations.gov, type USCG–2021– event. federalism implications. The rule will 0170 in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket IV. Discussion of Comments, Changes, not have substantial direct effects on the and the Rule States, on the relationship between the Folder on the line associated with this national government and the States, or rule. As noted above, we received no on the distribution of power and FOR FURTHER INFORMATION CONTACT: If comments on our NPRM published responsibilities among the various you have questions on this rule, call or April 6, 2021. There are no changes in levels of government. email Mr. Scott Whalen, Marine Safety the regulatory text of this rule from the Unit Port Arthur, U.S. Coast Guard; proposed rule in the NPRM. VIII. Executive Order 13175, Indian telephone 409–719–5086, email This rule establishes a safety zone Tribal Governments [email protected]. from 8:30 a.m. to 6 p.m. on May 22 and This rule will not have substantial SUPPLEMENTARY INFORMATION: 23, 2021. The safety zone will cover all direct effects on one or more Indian navigable waters of the Sabine River, tribes, on the relationship between the I. Table of Abbreviations extending the entire width of the river, Federal Government and Indian tribes, CFR Code of Federal Regulations adjacent to the public boat ramp located or on the distribution of power and DHS Department of Homeland Security in Orange, TX bounded to the north by responsibilities between the Federal FR Federal Register the Orange Public Wharf and latitude ° ′ ″ Government and Indian tribes. NPRM Notice of proposed rulemaking 30 05 50 N and to the south at latitude § Section 30°05′33″ N. The duration of the safety Signed this 23rd day of April, 2021. U.S.C. United States Code zone is intended to protect participants, Jessica Looman, II. Background Information and spectators, and other persons and Principal Deputy Administrator, Wage and Regulatory History vessels, in the navigable waters of the Hour Division. Sabine River during high-speed boat [FR Doc. 2021–08927 Filed 4–28–21; 8:45 am] On March 18, 2021, the City of races and will include breaks and BILLING CODE 4510–27–P Orange, TX notified the Coast Guard opportunity for vessels to transit that it will be sponsoring high speed through the regulated area. No vessel or boat races from 8:30 a.m. to 6 p.m. on person will be permitted to enter the DEPARTMENT OF HOMELAND May 22 and 23, 2021, adjacent to the safety zone without obtaining SECURITY public boat ramp in Orange, TX. The permission from the COTP or a Captain of the Port Port Arthur (COTP) designated representative. Coast Guard has determined that potential hazards associated with high speed boat races V. Regulatory Analyses 33 CFR Part 165 would be a safety concern for spectator We developed this rule after craft and vessels in the vicinity of these considering numerous statutes and [Docket Number USCG–2021–0170] race events. In response, on April 6, Executive orders related to rulemaking. RIN 1625–AA00 2021, the Coast Guard published a Below we summarize our analyses notice of proposed rulemaking (NPRM) based on a number of these statutes and Safety Zone; Sabine River, Orange, TX titled ‘‘Safety Zone; Sabine River, Executive orders, and we discuss First Orange, TX’’ (86 FR 17755). There we Amendment rights of protestors. AGENCY: Coast Guard, Department of stated why we issued the NPRM, and Homeland Security (DHS). invited comments on our proposed A. Regulatory Planning and Review ACTION: Temporary final rule. regulatory action related to this Executive Orders 12866 and 13563 fireworks display. During the comment direct agencies to assess the costs and period that ended April 21, we received benefits of available regulatory 39 Calculated using growth in the Gross Domestic Product deflator from 1995 to 2019. Bureau of no comments. alternatives and, if regulation is Economic Analysis. Table 1.1.9. Implicit Price Under 5 U.S.C. 553(d)(3), the Coast necessary, to select regulatory Deflators for Gross Domestic Product. Guard finds that good cause exists for approaches that maximize net benefits.

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