DOL Takes First Step to Revisit Independent Contractor and Tip Rules
In accordance the Biden administration’s January 20 regulatory freeze memorandum, the U.S Department of Labor issued proposals to delay the effective dates of the Final Rules on independent contractor classification and tip regulations by 60 days, to allow the agency “the opportunity to review and consider the questions of law, policy, and fact raised by the rule[s].” In notices to be published in the Federal Register on February 5, the DOL proposed to delay the effective date of the independent contractor rule from March 8 to May 7 and the effective date of the tip regulations rule from March 1 to April 30.
The independent contractor rule would have revised the agency’s test for determining worker status to focus on two “core factors” (control and opportunity for profit and loss), and the tip regulations rule would have—among other things—eliminated the “80/20” test for determining whether and for what hours an employer can take a tip credit against the minimum wage.
Public comments on the proposals to delay the effective dates of the rules are due on February 17 (tip regulations rule) and February 24 (independent contractor rule).
We fully expect the DOL to implement the 60-day effective date delays with respect to both rules following the close of the public comment periods, to withdraw both rules prior to their new effective dates, and to begin the process of drafting proposed new rules on the same issues for public comment.
These latest actions follow a busy first month for the DOL under President Biden, in which the agency rescinded the Pro Good Guidance Rule, withdrew several Trump-era wage and hour opinion letters, and discontinued the PAID program under which employers could self-report violations and avoid liquidated damages. Watch for the DOL to take additional steps in the coming months to dismantle some of the prior administration’s actions and to align the agency’s priorities with those advanced by the White House.