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Federal Register / Vol. 86, No. 183 / Friday, September 24, 2021 / Rules and Regulations and the corresponding language in 579.2 to state that the employers receipt of advice from a responsible WHD official . . . to the effect that the conduct in question is not lawful, among other situations, can be sufficient to show that the employers conduct is knowing, but is not automatically dispositive. 86 FR 15823. The Department also explained in the CMP
NPRM that, although the preamble to the 2020 Tip final rule stated that an employers failure to make adequate further inquiry into the lawfulness of its conduct when it should have done so is tantamount to reckless disregard, the rules deletion of 578.3c3 and the corresponding language in 579.2 could be read as suggesting the opposite. See id. Accordingly, the Department proposed to reinsert language in 578.3c3 and 579.2 addressing reckless disregardspecifically, that reckless disregard of the requirements of the Act means, among other situations, that the employer should have inquired further into whether its conduct was in compliance with the Act and failed to make adequate further inquiry. 86 FR 15823.
2. Comments Regarding Proposed Willfulness Changes Multiple commenters supported the willfulness changes proposed in the CMP NPRM. The AG Coalition stated that the proposed revisions to 578.3c2 and 3 and 579.2 would address their concerns with the 2020
Tip final rules amendments to these provisions, which left the regulated community without guidance in determining when reckless conduct is willful among other concerns. The AG Coalition supported the Departments proposal to clarify that there may be other situations where a violation can be found knowing, in addition to when an employer has received advice from WHD that its conduct is unlawful. The AG Coalition also supported the Departments proposal to reinstate regulatory text regarding the meaning of reckless disregard in 578.3c3 and 579.2, including the Departments proposal that reckless disregard may be established in situations other than where the employer should have inquired further but did not do so adequately. 11 The Center for Workplace Compliance CWC stated that it was pleased to support the 11 The AG Coalition also stated that section 578.3c2 could be strengthened by re-inserting the shall be deemed language while maintaining consistency with Richland Shoe, though the proposed revision is much improved from the 2020
Tip Rule.

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Departments proposal to retain language in 578.3c2 and 579.2
stating that an employers receipt of advice from WHD that its conduct was unlawful is not automatically dispositive of willfulness. According to CWC, this language recognizes that employers should not be automatically subject to CMPs where legitimate questions exist concerning . . .
coverage.
Commenters representing employees generally supported the proposed willfulness changes in part.
Commenters such as Restaurant Opportunities Centers United ROC
United, the North Carolina Justice Center NCJC, and the National Employment Lawyers Association NELA supported the Departments affirmation in the CMP NPRM that the two scenarios identified in its regulationsan employers receipt of advice from WHD that its conduct was unlawful and an employers failure to adequately inquire into the lawfulness of its conduct when it should have done socan be sufficient to establish willfulness. See also Texas RioGrande Legal Aid TRLA TRLA appreciates the DOLs improvement between the prior notice of proposed rulemaking and this reproposal.. These commenters noted that they understood the Departments concern that the 1992
versions of 578.3c2 and 3 and 579.2 may be in tension with Richland Shoe and with 578.3c1s requirement that all facts and circumstances be considered.12
However, to give the scenarios identified in the regulations the proper weight, commenters representing employees recommended that the Department establish a rebuttable presumption that a violation is knowing when an employer received notice from WHD that its conduct was unlawful, and that a violation is in reckless disregard of the law if the employer failed to make adequate inquiry into whether its conduct was compliant.
See, e.g., ROC United; NCJC; NELA;
NELP; TRLA.
The NRA and NFIB urged the Department to retain the 2020 Tip final rules revisions to 578.3c2 and 3
and 579.2. The NRA stated that it supported the 2020 Tip final rules willfulness changes for the reasons that the Department already outlined in the 12 In contrast, NELP stated that the longstanding regulatory language in 578.3c2 and 3 and 579.2 stating that violations shall be deemed willful in certain scenarios is not in tension with language elsewhere in FLSA regulations and in precedent requiring that all of the facts and circumstances be considered in determining whether a violation was willful.

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2020 Tip final rule before the Departments sudden change of opinion in the CMP NPRM. The NFIB
supported the 2020 Tip final rules willfulness changes over those proposed in the CMP NPRM as well, characterizing the 2020 revisions as reasonable and practical. In the alternative, NFIB requested that the Department retain the 2020 Tip final rules willfulness changes for small and independent businesses.
3. Discussion of Comments and Rationale for Finalizing Proposed Changes to Portions of CMP Regulations Addressing When a Violation Is Willful After considering all the comments, the Department is finalizing the revisions to 578.3c2 and c3 and 579.2 as proposed.
The Department continues to believe that revisions to its 1992 regulations regarding when a violation of the FLSA
is willful are necessary for the reasons identified in the 2020 Tip final rule: To resolve the tensions identified by appellate courts within 578.3c and between 578.3c and Richland Shoe and to align these provisions more closely with how the Department actually litigates. Accordingly, as proposed in the CMP NPRM, the Department is retaining the language in 578.3c2 and the corresponding language in 579.2 that an employers receipt of advice from WHD that its conduct is unlawful is not automatically dispositive of a knowing violation. By clarifying that an employers receipt of advice from WHD
that its conduct is unlawful is not automatically dispositive, the Department also addresses the concern raised by CWC that such evidence should not automatically subject an employer to CMPs where the employer has a legitimate disagreement with WHD concerning the FLSAs coverage.
At the same time, this rules revisions to 578.3c2 and 579.2 affirm that an employers receipt of advice from WHD
that its conduct is unlawful can be sufficient to show that a violation is knowing and thus willful. In accordance with 578.3c1, all facts and circumstances surrounding the violation must be taken into account when determining willfulness. However, an employers receipt of advice from WHD
that its conduct is unlawful is a significant, and may be a determining, factor regarding that employers willfulness.
By finalizing the proposed changes to 578.2c2 and the corresponding language in 579.2, this rule also makes explicit, consistent with considering all of the facts and circumstances, that
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