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Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Proposed Rules
result in a rule that may: 1 Have an annual effect on the economy of $100
million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities also referred to as economically significant; 2 create serious inconsistency or otherwise interfere with an action taken or planned by another agency; 3
materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or 4 raise novel legal or policy issues arising out of legal mandates, the Presidents priorities, or the principles set forth in the Executive order. OIRA has determined that this proposed delay is not economically significant under section 3f of Executive Order 12866.
Executive Order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with obtaining the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. Executive Order 13563 recognizes that some costs and benefits are difficult to quantify and provides that, when appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. The analysis below outlines the impacts that the Department anticipates may result from this proposed delay and was prepared pursuant to the above-mentioned executive orders.
In this NPRM, the Department proposes to further extend the effective date of three portions of the 2020 Tip final rule in order to complete a separate rulemaking, published elsewhere in this issue of the Federal Register. This delay will provide the Department additional time to consider whether to withdraw and repropose the portion of the 2020
Tip final rule addressing the application of the FLSAs tip credit provision to tipped employees who perform both tipped and non-tipped duties. The remainder of the 2020 Tip final rule, including portions addressing the keeping of tips and tip pooling,18
recordkeeping,19 and other minor 18 29 CFR 10.28c, ef; 531.50 through 531.52, 531.54.
19 29 CFR 516.28b.

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changes 20 will become effective upon the expiration of the first effective date extension, which extended the effective date of the 2020 Tip final rule to April 30, 2021. See 86 FR 11632.
In March 2018, Congress amended section 3m and sections 16b, c, and e of the FLSA to prohibit employers from keeping their employees tips, to permit recovery of tips that an employer unlawfully keeps, and to suspend the operations of the portions of the 2011
final rule that restricted tip pooling when employers do not take a tip credit.
In the economic analysis of the 2020 Tip final rule, the Department quantified transfer payments that could occur when employers institute nontraditional tip pools. Because these transfers have already been quantified, and the provision regarding tip pooling will go into effect on April 30, 2021, this proposed delay will not have any impact on these quantified transfers.
The Department acknowledges that the industries that may be affected by the proposed delay are those that were acknowledged to have tipped workers in the 2020 Tip final rule. These industries are classified under the North American Industry Classification System NAICS
as 713210 Casinos, 721110 Hotels and Motels, 722410 Drinking Places Alcoholic Beverages, 722511 Fullservice Restaurants, 722513 Limited Service Restaurants, and 722515 Snack and Nonalcoholic Beverage Bars. The 2017 data from the Statistics of US
Businesses SUSB reports that these industries have 503,915 private firms and 661,198 private establishments.21
Part of the reason for proposing an additional delay of the effective date is for the Department to consider withdrawing or retaining the portion of the rule that amends the Departments dual jobs regulations to address the application of the FLSA tip credit to tipped employees who perform both tipped and non-tipped duties. In the 2020 Tip final rule, the Department amended its dual jobs regulation to largely codify WHDs recent guidance regarding when an employer can take a tip credit for hours that a tipped employee performs non-tipped duties related to his or her occupation, which replaced the 20 percent limitation on related non-tipped duties with an updated related duties test. The Department provided a qualitative analysis of this change, and stated that the removal of a 20 percent cap on tasks 20 29 CFR 531.50, 531.51, 531.52, 531.55, 531.56a, 531.56cd, 531.59, and 531.60.
21 Statistics of U.S. Businesses 2017, https
www.census.gov/data/tables/2017/econ/susb/2017susb-annual.html, 2016 SUSB Annual Data Tables by Establishment Industry.

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that are not directly tied to receipt of a tip may result in tipped workers such as wait staff and bartenders performing more non-tipped related duties.22 The Department acknowledged that one outcome could be that employment of workers currently performing these duties may fall while tipped workers might lose tipped income by spending more of their time performing duties where they are not earning tips, while still receiving cash wages of less than the minimum wage. The Department also stated that eliminating the cost to scrutinize employees time to demonstrate compliance with the 20
percent approach would result in costs savings to employers.
As discussed above, the Pennsylvania litigants and individuals who submitted comments on the Departments Delay Rule raised significant concerns regarding the economic analysis of the portion of the 2020 Tip final rule that amends the dual jobs regulation. See, e.g., EPI; Results for America;
Restaurant Opportunities Centers United. The proposed effective date delay will allow the Department to better consider this portion of the 2020
Tip final rule, and determine if there is a clearer way to address the application of the FLSA tip credit to tipped employees who perform both tipped and non-tipped duties. In the event that there would have been transfers or cost savings associated with the change, these effects will be delayed. The delay will also provide the Department more time to quantify any impact associated with a change to the dual jobs regulation.
The Department does not believe that the proposed delay in the CMP portions of the 2020 Tip final rule will have an impact on costs or transfers, as these provisions only apply when an employer violates the FLSA.
The Department welcomes any comments and data on possible costs or benefits associated with this proposed delay.
V. Regulatory Flexibility Act RFA
Analysis The Regulatory Flexibility Act of 1980
RFA, 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104121 1996, requires Federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. The 22 Examples of such duties are cleaning and setting tables, toasting bread, making coffee, and occasionally washing dishes or glasses.

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