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Federal Register / Vol. 86, No. 56 / Thursday, March 25, 2021 / Proposed Rules
definition of willfulness. 9 In its comment on the proposed Delay Rule, NELP similarly argued that the 2020 Tip final rules revisions addressing when a violation is willful do not comport with Congresss intent or with longstanding U.S. Supreme Court precedent and its progeny, including McLaughlin v. Richland Shoe.10
Following its review of the Pennsylvania complaint and comments on the proposed Delay Rule, the Department is proposing in an NPRM
published separately in this edition of the Federal Register to withdraw and repropose this part of the 2020 Tip final rule to make changes to the portion of the rule regarding the meaning of willfulness under the Departments CMP regulations; these changes include reinserting language addressing the meaning of reckless disregard. The Department believes that delaying the effective date of the portion of the 2020
Tip final rule while it completes rulemaking on this issue is necessary to ensure that the new regulations comport with the Supreme Courts decision in Richland Shoe and will prevent confusion and uncertainty among the regulated community regarding what constitutes a willful violation.
The third portion of the 2020 Tip final rule that the Department is proposing to further delay addresses the amendment of its dual jobs regulation to address when an employer can continue to take an FLSA tip credit for an employee who is engaged in a tipped occupation and performs both tipped and non-tipped duties, see 531.56e.11 The Pennsylvania litigants and commenters on the Departments proposal to delay the 2020 Tip final rule for 60 days raised significant substantive and procedural concerns regarding this portion of the 2020 Tip final rule.
Regarding the economic analysis, the Pennsylvania litigants argue that the Department failed to consider or quantify the effect that this portion of the rule would have on workers and their families and disregarded the data and analysis provided by a commenter on the NPRM for the 2020
9 Id.
10 NELP specifically argued that the 2020 Tip final rules revisions to the regulations regarding the meaning of willfulness make it easier for employers to either ignore compliance advice from the Department, or to fail to pursue inquiry regarding compliance with minimum wage and overtime protections.
11 See also 10.28b incorporating the same guidance on when an employer can continue to take an FLSA tip credit for an employee who is engaged in a tipped occupation and performs both tipped and non-tipped duties in the Departments regulations relating to Executive Order 13658, Establishing a Minimum Wage for Contractors.

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Tip final rule, the Economic Policy Institute EPI.12 In its comment regarding the Delay Rule, EPI stated that the final rules response to its analysis and its qualitative discussion of benefits and transfers associated with this portion of the rule is not sufficient and delaying the effective date of the rule is highly appropriate to give the Department time to reassess the rule.
This concern strongly suggests that the Department should revisit the economic analysis regarding the portion of the 2020 Tip final rule addressing the application of the FLSA tip credit to tipped employees who perform tipped and non-tipped work, and calls into question whether this portion of the rule would withstand a challenge under the Administrative Procedure Act claiming that the Departments failure to include a quantitative economic analysis for this portion of the rule was arbitrary and capricious.
Regarding the substance of this portion of the rule, the Pennsylvania litigants argue that the 2020 Tip final rules new test for when an employer can take a tip credit for a tipped employee who performs non-tipped, related dutieslimiting the tip credit to non-tipped related duties performed contemporaneously with or for a reasonable time before or after tipped dutiesrelies on ill-defined terms and fails to provide any guidance as to whenor whethera worker could be deemed a dual employee during a shift or how long before or after a shift constitutes a reasonable time. 13
District courts have also found these terms in the Departments current guidance, which the 2020 Tip final rule largely codified, to be unclear and have refused to follow it.14 Additionally, the 12 See Commonwealth of Pennsylvania et al. v.
Scalia et al., No. 2:21cv00258, pp. 103, 109 E.D.
Pa., Jan. 19, 2021
13 Id. at 128, 131; see also id. at p. 129 The Department never provides a precise definition of contemporaneous, simply stating that it means during the same time as before making the caveat that it does not necessarily mean that the employee must perform tipped and non-tipped duties at the exact same moment in time.
14 The preamble to the 2020 Tip final rule lists many of these decisions. See 85 FR 8677071. In Belt v. P.F. Changs China Bistro, Inc., 401 F. Supp.
3d 512, 533 E.D. Pa. 2019, for example, the district court held that the dual jobs guidance was unreasonable because the temporal limitations it imposes on untipped related work conflict with certain language occasionally, part of the time that remains in the text of the Dual Jobs regulation. See also Berger v. Perrys Steakhouse of Ill., LLC, 430 F. Supp. 3d 397, 41112 N.D. Ill.
2019 same. Another district court stated that 2018
DOL guidance inserts new uncertainty and ambiguity into the analysis and noted that the Department fails to explain how long a reasonable time would be, or what is meant by performing non-tipped work contemporaneously with tipped
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Pennsylvania litigants challenged the 2020 Tip final rules use of the Occupational Information Network ONET to define related duties, which, according to their complaint, authorizes employers to engage in conduct that has been prohibited under the FLSA for decades. 15
Commenters who supported the proposed Delay Rule argued that the 2020 Tip final rules new test for when an employer can take a tip credit for a tipped employee who performs nontipped, related duties does not comply with the CAA Amendments, since it permits employers to take tips that belong to employees. See NELP; see also NWLC; National Employment Lawyers Association NELA. These commenters also asserted that most courts that have considered the Departments current guidance on this issue, which the 2020 Tip final rule largely codified, have not afforded it any deference.16
These arguments by the Pennsylvania litigants and commenters on the proposed Delay Rule further call into question whether this portion of the rulemaking can withstand judicial review, as well as whether the 2020 Tip final rule accurately identifies when a tipped employee who is performing non-tipped duties is still engaged in a tipped occupation under the auspices of work. Flores v. HMS Host Corp., No. 183312, 2019 WL 5454647 D. Md. Oct. 23, 2019.
15 See Commonwealth of Pennsylvania et al. v.
Scalia et al., No. 2:21cv00258, p. 115 E.D. Pa., Jan. 19, 2021 Because it seeks to describe the work world as it is, not as it should be, ONET
cannot and does not account for FLSA violations in industries known to have high violation rates like the restaurant industry; therefore, using it to determine related duties will sanction conduct that has been prohibited under the FLSA for decades.;
id. at p. 117 ONET tasks for waiters and waitresses include cleaning duties, such as sweeping and mopping floors, vacuuming carpet, tidying up server station, taking out trash, or checking and cleaning bathroomswhen from 1988 until 2018, the Departments Field Operations Handbook specified as an example, maintenance work e.g., cleaning bathrooms and washing windows is not related to the tipped occupation of a server; such jobs are non-tipped occupations. . Some district courts have levied this same criticism against the use of ONET to perform this test. See, e.g., ONeal v. Denn-Ohio, LLC, No. 19280, 2020 WL 210801 at 7 N.D. Ohio Jan. 14, 2020 declining to defer to the 2018
guidance in part because ONET relies in part on data obtained by asking employees which tasks their employers assign them to perform, which would allow employers to re-write the regulation without going through the normal rule-making process, and is therefore unreasonable.
16 In support of this assertion, commenters cited a variety of cases, including Belt v. P.F. Changs China Bistro, Inc., 401 F. Supp. 3d 512, 533 E.D.
Pa. 2019, Spencer v. Macados, Inc., 399 F. Supp.
3d 545, 553 W.D. Va. 2019, and Cope v. Lets Eat Out, Inc., 354 F. Supp. 3d 976, 986 W.D. Mo.
2019. See NELP; see also NETWORK, Restaurant Opportunities Center United, NELA crossreferencing NELPs citations to these cases.

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