During the past several presidential transitions, it has become a trend for the incoming administration to repeal or delay many regulations and guidance documents issued in the waning days of the previous administration. The switch from the Trump administration to the Biden administration shows the trend has continued and likely will do so for the foreseeable future.
Compensating Tipped Employees
One example of the trend is the final rule affecting compensation for tipped employees, which the U.S. Department of Labor (DOL) adopted during the Trump administration’s final days.
As noted in an earlier HR Laws article, the DOL sought, among other things, to repeal what has become known as the “20% rule” and instead adopt a more workable solution for employers with tipped employees. The rule was scheduled to go into effect on March 1, 2021.
Applying Independent Contractor Test
Another new rule, scheduled to take effect on March 8, would have provided significant clarity to employers applying the economic realities test to evaluate whether a worker is (1) an employee entitled to overtime pay or (2) an independent contractor who isn’t protected by the Fair Labor Standards Act’s (FLSA) overtime requirements.
After issuing the regulation, the DOL provided an opinion letter offering significant clarity on the rule’s applicability to owner-operators in the motor carrier industry.
Both Rules’ Effective Dates Delayed
After President Joe Biden took office, he directed all federal agencies to freeze pending regulations for additional review and consideration. Following the instruction, the DOL delayed the proposed effective dates for both regulations, which also were reopened for public comment:
- The tipped employee regulation’s effective date has been delayed until at least April 20, 2021
- The independent contractor rule’s effective date has been put off until at least May 7, 2021
Furthermore, the DOL withdrew the owner-operator opinion letter and similar opinion letters on grounds they “were issued prematurely because they are based on rules that have not gone into effect.”
Bottom Line for Employers
Whether the two regulations will take effect on the proposed dates remains to be seen. You should continue to stay apprised of the DOL’s evolving policies and guidance under the Biden administration.
Tessa L. Castner and Kyle D. Johnson are attorneys with Frost Brown Todd LLC. You can reach them at tcastner@fbtlaw.com or kjohnson@fbtlaw.com.