Tipped Employee Final Rule in Flux

04/19/2021 10:52 AM | Alex Clark

The Tip Regulations Under the Fair Labor Standards Act (FLSA) final rule (2020 Tip final rule) was published on December 30, 2020, with an effective date of March 1, 2021; however:

  • On February 26, 2021, the DOL issued a final rule delaying the effective date until April 30, 2021; and
  • On March 23, 2021, the Department announced two Notices of Proposed Rulemaking (NPRMs) for tipped workers as the effective date of the 2020 Tip final rule nears:
    • Tip Regulations Under the Fair Labor Standards Act (FLSA); Delay of Effective Date, which proposes to further extend, until December 31, 2021, the effective date of two portions of the 2020 Tip final rule related to the assessment of civil money penalties (CMPs) under the FLSA, and the portion addressing the FLSA tip credit’s application to tipped employees who perform tipped and non-tipped duties. The Department invites public comments on this NPRM for twenty (20) days following publication of the NPRM in the Federal Register (from March 25, 2021 through April 14, 2021).
    • Tip Regulations under the Fair Labor Standards Act (FLSA); Partial Withdrawal, which proposes to withdraw and re-propose the two portions of the 2020 Tip final rule addressing CMP assessments. This NPRM also seeks comments on whether to revise one other portion of the 2020 Tip final rule (addressing managers and supervisors who cannot keep employee’s tips) and asks how it might improve the recordkeeping requirements in the 2020 Tip final rule in a future rulemaking. The Department invites public comments on this NPRM for sixty (60) days following publication of the NPRM in the Federal Register (from March 25, 2021 through May 24, 2021).

However, the following portions of the final rule will continue to take effect on April 30, 2021:

  • Employers that do not take a tip credit may implement mandatory “nontraditional” tip pools, which are tip pools that include employees who do not customarily and regularly receive tips;
  • New recordkeeping requirement for employers that do not take a tip credit but collect employees’ tips to operate a mandatory tip pool; and
  • Employers, regardless of whether they take a tip credit, are prohibited from keeping employees’ tips for any reason, which includes prohibiting managers and supervisors from keeping tips received by employees.

Read more about the final rule on the DOL’s website.


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