8326 Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Proposed Rules 

matter of public record and will be 

posted without change to https://

www.regulations.gov, including any 

personal information provided. All 

comments must be received by 11:59 

p.m. on February 17, 2021, for 

consideration in this proposed delay of 

effective date. The Department strongly 

recommends that commenters submit 

their comments electronically via http:// 

www.regulations.gov to ensure timely 

receipt prior to the close of the comment 

period, as the Department continues to 

experience delays in the receipt of mail. 

Submit only one copy of your comments 

by only one method. Docket: For access 

to the docket to read background 

documents or comments, go to the 

Federal eRulemaking Portal at http://

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Amy DeBisschop, Division of 

Regulations, Legislation, and 

Interpretation, Wage and Hour Division, 

U.S. Department of Labor, Room S– 

3502, 200 Constitution Avenue NW, 

Washington, DC 20210; telephone: (202) 

693–0406 (this is not a toll-free 

number). Copies of this proposal may be 

obtained in alternative formats (Large 

Print, Braille, Audio Tape or Disc), upon 

request, by calling (202) 693–0675 (this 

is not a toll-free number). TTY/TDD 

callers may dial toll-free 1–877–889– 

5627 to obtain information or request 

materials in alternative formats. 

SUPPLEMENTARY INFORMATION: In the 

Consolidated Appropriations Act of 

2018 (‘‘CAA’’), Congress amended 

section 3(m) of the Fair Labor Standards 

Act (‘‘FLSA’’ or ‘‘Act’’) to prohibit 

employers from keeping tips received by 

their employees, regardless of whether 

the employers take a tip credit under 

section 3(m). On December 30, 2020, the 

Wage and Hour Division (‘‘WHD’’) 

published Tip Regulations Under the 

Fair Labor Standards Act (the ‘‘Tip 

Rule’’) in the Federal Register to 

address these amendments. See 85 FR 

86756. The Tip Rule would also codify 

WHD’s guidance regarding the tip 

credit’s application to tipped employees 

who perform tipped and non-tipped 

duties. See id. The effective date of the 

Tip Rule is March 1, 2021. See id. 

In a memorandum dated January 20, 

2021 and entitled ‘‘Regulatory Freeze 

Pending Review,’’ (‘‘Regulatory Freeze 

Memorandum’’) published in the 

Federal Register on January 28, 2021 

(86 FR 7424), the Assistant to the 

President and Chief of Staff, on behalf 

of the President, directed the heads of 

Executive Departments and Agencies to 

consider delaying the effective dates of 

all regulations that had been published 

in the Federal Register but had not yet 

taken effect until 60 days following the 

date of the memorandum or beyond; the 

Tip Rule falls into this category. The 

Regulatory Freeze Memorandum states 

that the purpose of such delays is for 

agencies to review any questions of fact, 

law, and policy that the rules may raise. 

The memorandum notes certain 

exceptions that do not apply here. On 

January 20, 2021, the Office of 

Management and Budget (OMB) also 

published OMB Memorandum M–21– 

14, Implementation of Memorandum 

Concerning Regulatory Freeze Pending 

Review, which provides guidance 

regarding the Regulatory Freeze 

Memorandum. See M–21–14, 

Implementation of Memorandum 

Concerning Regulatory Freeze Pending 

Review, https://www.whitehouse.gov/ 

wp-content/uploads/2021/01/M-21-14- 

Regulatory-Review.pdf (last visited Jan. 

26, 2021). OMB Memorandum M–21–14 

explains that pursuant to the Regulatory 

Freeze Memorandum, agencies ‘‘should 

consider postponing the effective dates 

for 60 days and reopening [the] 

rulemaking processes’’ for ‘‘rules that 

have not yet taken effect and about 

which questions involving law, fact, or 

policy have been raised.’’ Id. In 

accordance with the Regulatory Freeze 

Memorandum and OMB Memorandum 

M–21–14, WHD proposes to delay the 

effective date of the Tip Rule by 60 days 

to April 30, 2021. 

Delaying the effective date of the Tip 

Rule for 60 days would provide WHD 

additional opportunity to review and 

consider the questions of law, policy, 

and fact raised by the rule, as 

contemplated by the Regulatory Freeze 

Memorandum and OMB Memorandum 

M–21–14, before the rule goes into 

effect. In particular, WHD could 

consider whether the Tip Rule properly 

implements the CAA Amendments to 

section 3(m) of the FLSA, which 

prohibit employers from keeping tips for 

any purpose, whether the Tip Rule 

adequately considered the possible 

costs, benefits, and transfers between 

employers and employees related to the 

codification of WHD’s guidance 

regarding the tip credit’s application to 

tipped employees who perform tipped 

and non-tipped duties, and whether the 

Tip Rule otherwise effectuates the CAA 

amendments to the FLSA, including the 

statutory provision for civil money 

penalties for violations of section 

3(m)(2)(B) of the Act. Additionally, on 

January 19, 2021, eight states and the 

District of Columbia filed a complaint 

for declaratory and injunctive relief in 

the United States District Court for the 

Eastern District of Pennsylvania, in 

which they argued that the Department 

violated the Administrative Procedure 

Act in promulgating the Tip Rule. The 

delay of the Tip Rule’s effective date 

would also give WHD the opportunity to 

review and consider the rule in light of 

the issues raised by that complaint. 

WHD believes that the proposed 

delay, in accordance with the 

Regulatory Freeze Memorandum and 

OMB Memorandum M–21–14, is 

reasonable given the issues of fact, law, 

and policy raised by the rule, and will 

not be disruptive, given that the Tip 

Rule is not yet effective and WHD has 

not implemented the rule. 

WHD seeks comment on its proposal 

to delay the Tip Rule’s effective date to 

April 30, 2021 in order to further review 

and consider the rule. WHD will 

consider only comments about its 

proposal to delay the Tip Rule’s 

effective date. 

Milton A. Stewart, 

Acting Secretary of Labor. 

[FR Doc. 2021–02485 Filed 2–3–21; 11:15 am] 

BILLING CODE 4510–27–P 

DEPARTMENT OF LABOR 

Wage and Hour Division 

29 CFR Parts 780, 788, and 795 

RIN 1235–AA34 

Independent Contractor Status Under 

the Fair Labor Standards Act: Delay of 

Effective Date 

AGENCY: Wage and Hour Division, 

Department of Labor. 

ACTION: Proposed delay of effective date. 

SUMMARY: In accordance with the 

Presidential directive as expressed in 

the memorandum of January 20, 2021 

from the Assistant to the President and 

Chief of Staff, entitled ‘‘Regulatory 

Freeze Pending Review,’’ this action 

proposes to delay until May 7, 2021, the 

effective date of the rule entitled 

Independent Contractor Status Under 

the Fair Labor Standards Act 

(‘‘Independent Contractor Rule’’), 

published in the Federal Register on 

January 7, 2021. The rule’s current 

effective date is March 8, 2021. The 

Wage and Hour Division seeks 

comments on this proposed delay, 

which would allow it additional 

opportunity for review and 

consideration of the new rule. 

DATES: Submit written comments on or 

before February 24, 2021. 

ADDRESSES: You may submit comments, 

identified by Regulatory Information 

Number (RIN) 1235–AA34, by either of 

the following methods: Electronic 


jbell on DSKJLSW7X2PROD with PROPOSALS
Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Proposed Rules 8327 

1See, e.g., Rutherford Food Corp. v. McComb, 331 

U.S. 722, 728 (1947) (‘‘The [FLSA] definition of 

‘employ’ is broad.’’); United States v. Rosenwasser, 

323 U.S. 360, 362–63 (1945) (‘‘A broader or more 

comprehensive coverage of employees [than that of 

the FLSA] . . . would be difficult to frame.’’). 

2See 86 FR 1209, 1223. 

Comments: Submit comments through 

the Federal eRulemaking Portal at 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

Mail: Address written submissions to 

Division of Regulations, Legislation, and 

Interpretation, Wage and Hour Division, 

U.S. Department of Labor, Room S– 

3502, 200 Constitution Avenue NW, 

Washington, DC 20210. Instructions: 

Please submit only one copy of your 

comments by only one method. 

Commenters submitting file attachments 

on www.regulations.gov are advised that 

uploading text-recognized documents— 

i.e., documents in a native file format or 

documents which have undergone 

optical character recognition (OCR)— 

enable staff at the Department to more 

easily search and retrieve specific 

content included in your comment for 

consideration. Anyone who submits a 

comment (including duplicate 

comments) should understand and 

expect that the comment will become a 

matter of public record and will be 

posted without change to https://

www.regulations.gov, including any 

personal information provided. All 

comments must be received by 11:59 

p.m. on February 24, 2021, for 

consideration in this proposed delay of 

effective date. The Department strongly 

recommends that commenters submit 

their comments electronically via http:// 

www.regulations.gov to ensure timely 

receipt prior to the close of the comment 

period, as the Department continues to 

experience delays in the receipt of mail. 

Submit only one copy of your comments 

by only one method. Docket: For access 

to the docket to read background 

documents or comments, go to the 

Federal eRulemaking Portal at http://

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Amy DeBisschop, Division of 

Regulations, Legislation, and 

Interpretation, Wage and Hour Division, 

U.S. Department of Labor, Room S– 

3502, 200 Constitution Avenue NW, 

Washington, DC 20210; telephone: (202) 

693–0406 (this is not a toll-free 

number). Copies of this proposal may be 

obtained in alternative formats (Large 

Print, Braille, Audio Tape or Disc), upon 

request, by calling (202) 693–0675 (this 

is not a toll-free number). TTY/TDD 

callers may dial toll-free 1–877–889– 

5627 to obtain information or request 

materials in alternative formats. 

SUPPLEMENTARY INFORMATION: On 

January 7, 2021, the Department of 

Labor’s Wage and Hour Division 

(‘‘WHD’’) published the Independent 

Contractor Rule in the Federal Register 

with an effective date of March 8, 2021. 

See 86 FR 1168. The Independent 

Contractor Rule would, among other 

actions, introduce into title 29 of the 

Code of Federal Regulations a new part 

(part 795) entitled ‘‘Employee or 

Independent Contractor Classification 

under the Fair Labor Standards Act.’’ 

See id. 

In a memorandum dated January 20, 

2021 and entitled ‘‘Regulatory Freeze 

Pending Review,’’ published in the 

Federal Register on January 28, 2021 

(86 FR 7424) (‘‘Regulatory Freeze 

Memorandum’’), the Assistant to the 

President and Chief of Staff, on behalf 

of the President, directed the heads of 

Executive Departments and Agencies to 

review and consider delaying the 

effective dates of all regulations that had 

been published in the Federal Register 

but had not yet taken effect until 60 

days following the date of the 

memorandum or beyond. The 

Independent Contractor Rule falls 

within this category. The Regulatory 

Freeze Memorandum states that the 

purpose of such delays is for agencies to 

review any questions of fact, law, and 

policy that the rules may raise. The 

memorandum notes certain exceptions 

that do not apply here. On January 20, 

2021, the Office of Management and 

Budget (OMB) also published OMB 

Memorandum M–21–14, 

Implementation of Memorandum 

Concerning Regulatory Freeze Pending 

Review, which provides guidance 

regarding the Regulatory Freeze 

Memorandum. See M–21–14, 

Implementation of Memorandum 

Concerning Regulatory Freeze Pending 

Review, https://www.whitehouse.gov/ 

wp-content/uploads/2021/01/M-21-14- 

Regulatory-Review.pdf (last visited Jan. 

26, 2021). OMB Memorandum M–21–14 

explains that pursuant to the Regulatory 

Freeze Memorandum, agencies ‘‘should 

consider postponing the effective dates 

for 60 days and reopening the 

rulemaking process’’ for ‘‘rules that have 

not yet taken effect and about which 

questions involving law, fact, or policy 

have been raised.’’ Id. In accordance 

with the Regulatory Freeze 

Memorandum and OMB Memorandum 

M–21–14, WHD proposes to delay the 

effective date of the Independent 

Contractor Rule to May 7, 2021, which 

would be 60 days beyond its original 

effective date. 

The delay of the Independent 

Contractor Rule’s effective date would 

give WHD additional opportunity to 

review and consider the rule as the 

Regulatory Freeze Memorandum and 

OMB Memorandum M–21–14 

contemplate. The rule, which would be 

WHD’s first generally applicable 

regulation addressing the question of 

who is an independent contractor and, 

thus, not an employee under the FLSA, 

would adopt a new legal standard for 

determining employee and independent 

contractor status under the FLSA. In 

light of the significance of this change, 

WHD is proposing to allow itself more 

time to further review and consider, 

among other important issues, the legal, 

policy, and/or enforcement implications 

of adopting that standard, such as: 

Whether the rule effectuates the FLSA’s 

purpose, recognized repeatedly by the 

Supreme Court, to broadly cover 

workers as employees; 1 the costs and 

benefits attributed to the rule, including 

the assertion that workers as whole will 

benefit from the rule; 2 and/or whether 

the rule’s explanation of the standard 

provides clarity for stakeholders and for 

the purposes of WHD enforcement, as 

was intended. 

In addition, WHD believes that the 

proposed delay is reasonable and would 

not be disruptive. The Independent 

Contractor Rule is not yet effective, and 

WHD has not implemented the rule. For 

example, WHD’s public guidance, 

including its longstanding Fact Sheet 

#13, entitled ‘‘Employment Relationship 

under the Fair Labor Standards Act 

(FLSA),’’ does not contain the rule’s 

standard for determining whether a 

worker is an employee or independent 

contractor and will continue to be 

available to all. Moreover, Federal 

courts across the country have 

developed and applied legal analyses 

for determining employee and 

independent contractor status under the 

FLSA. In sum, employers and workers 

are already familiar with the standard 

that WHD and courts will apply when 

determining a worker’s status under the 

FLSA during any delay of the rule’s 

effective date. 

WHD seeks comment on its proposal 

to delay the Independent Contractor 

Rule’s effective date to May 7, 2021 in 

order to further review and consider the 

rule. WHD will consider only comments 

about its proposal to delay the rule’s 

effective date. 

Milton A. Stewart, 

Acting Secretary of Labor. 

[FR Doc. 2021–02484 Filed 2–3–21; 11:15 am] 

BILLING CODE 4510–27–P 


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