The U.S. Department of Labor (USDOL) will delay its final rule on Tip Regulations published in the Federal Register and originally set to take effect March 1. This is in accordance with the Presidential directive of January 20, 2021, instructing federal agencies to freeze pending regulatory changes to allow the new administration time to review them. The new proposed effective date is April 30; see details of the proposed rule on the Federal Register site. The rule would address amendments to the FLSA that prohibit employers from keeping tips received by employees regardless of whether the employers have a tip credit system. It would also codify guidance regarding the tip credit’s application to tipped employees who perform tipped and non-tipped duties. The rule eliminates the longstanding “80/20 Rule” limiting the amount of time that tipped employees may spend performing non-tipped duties and still receive the federal tipped minimum wage. On January 19, 2021, eight states and the District of Columbia filed suit in federal court challenging the rule and claiming the USDOL is in violation of the Administrative Procedure Act by not adequately identifying the costs and benefits of the arbitrary elimination of the 80/20 rule.
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