Department of Labor Delays Effective Date of Regulations on Independent Contractors and Tips

On February 5, 2021, the U.S. Department of Labor (DOL) published notices in the Federal Register of its proposed delay of the effective dates of the Trump administration’s regulations addressing independent contractor classification and tipped workers. The DOL’s Wage and Hour Division (WHD) indicates that the delay is necessary to “provide the WHD additional opportunity to review and consider the questions of law, policy, and fact” raised by the new regulations.

The independent contractor regulation was published on January 7, 2021, and scheduled to go into effect on March 8, 2021. The regulation largely affirms the economic dependence test for determining independent contractor status. The tip regulation was published on December 30, 2020, and was set to take effect on March 1, 2021. This regulation would permit tip pooling for employers that do not take a tip credit and would allow “back of the house” employees (e.g., cooks and dishwashers) to share in tip pools. Instituting a 60-day delay of the effective date for both of these regulatory changes will provide the opportunity for public comment; however, this delay still creates a small window for effective comment and consideration by the new administration.

The public may submit written comments on the tip regulations on or before February 17, 2021. The public may submit written comments regarding the independent contractor rule on or before February 24, 2021. Comments on both regulations may be made using the federal eRule Making Portal or by mail to the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue Northwest, Washington, D.C. 20210.

This proposed delay was expected as President Joe Biden instructed federal agencies in a January 20, 2021, written memorandum to freeze pending regulations for 60 days until the new administration has the opportunity to review and consider the impact of these new regulations.

Ogletree Deakins’ Wage and Hour Practice Group will continue to monitor and report on developments and will post updates on the Wage and Hour blog as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.