11632 Federal Register / Vol. 86, No. 37 / Friday, February 26, 2021 / Rules and Regulations 

22The broker-dealer will need to retain these 

written disclosures in accordance with the brokerdealer record retention rule. See 17 CFR 240.17a– 

4(b)(4). 

23The broker-dealer will need to retain these 

written agreements in accordance with the brokerdealer record retention rule. See 17 CFR 240.17a– 

4(b)(7). 

Howey test but are not registered with 

the Commission are excluded from 

SIPA’s definition of ‘‘securities’’—and 

thus the protections afforded to 

securities customers under SIPA may 

not apply; (b) describe the risks of fraud, 

manipulation, theft, and loss associated 

with digital asset securities; (c) describe 

the risks relating to valuation, price 

volatility, and liquidity associated with 

digital asset securities; and (d) describe, 

at a high level that would not 

compromise any security protocols, the 

processes, software and hardware 

systems, and any other formats or 

systems utilized by the broker-dealer to 

create, store, or use the broker-dealer’s 

private keys and protect them from loss, 

theft, or unauthorized or accidental 

use; 22 and 

9. The broker-dealer enters into a 

written agreement with each customer 

that sets forth the terms and conditions 

with respect to receiving, purchasing, 

holding, safekeeping, selling, 

transferring, exchanging, custodying, 

liquidating and otherwise transacting in 

digital asset securities on behalf of the 

customer.23

V. Request for Comment 

The Commission is seeking comment 

on the specific questions below. When 

responding to the request for comment, 

please explain your reasoning. 

1. What are industry best practices 

with respect to protecting against theft, 

loss, and unauthorized or accidental use 

of private keys necessary for accessing 

and transferring digital asset securities? 

What are industry best practices for 

generating, safekeeping, and using 

private keys? Please identify the sources 

of such best practices. 

2. What are industry best practices to 

address events that could affect a 

broker-dealer’s custody of digital asset 

securities such as a hard fork, airdrop, 

or 51% attack? Please identify the 

sources of such best practices. 

3. What are the processes, software 

and hardware systems, or other formats 

or systems that are currently available to 

broker-dealers to create, store, or use 

private keys and protect them from loss, 

theft, or unauthorized or accidental use? 

4. What are accepted practices (or 

model language) with respect to 

disclosing the risks of digital asset 

securities and the use of private keys? 

Have these practices or the model 

language been utilized with customers? 

5. Should the Commission expand 

this position in the future to include 

other businesses such as traditional 

securities and/or non-security digital 

assets? Should this position be 

expanded to include the use of nonsecurity digital assets as a means of 

payment for digital asset securities, such 

as by incorporating a de minimis 

threshold for non-security digital assets? 

6. What differences are there in the 

clearance and settlement of traditional 

securities and digital assets that could 

lead to higher or lower clearance and 

settlement risks for digital assets as 

compared to traditional securities? 

7. What specific benefits and/or risks 

are implicated in a broker-dealer 

operating a digital asset alternative 

trading system that the Commission 

should consider for any future measures 

it may take? 

By the Commission. 

Dated: December 23, 2020. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2020–28847 Filed 2–25–21; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF LABOR 

Office of the Secretary 

29 CFR Part 10 

Wage and Hour Division 

29 CFR Parts 516, 531, 578, 579, and 

580 

RIN 1235–AA21 

Tip Regulations Under the Fair Labor 

Standards Act (FLSA): Delay of 

Effective Date 

AGENCY: Wage and Hour Division, 

Department of Labor. 

ACTION: Final rule; delay of effective 

date. 

SUMMARY: Consistent 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 

finalizes the Department of Labor’s (‘‘the 

Department’’) proposal to delay until 

April 30, 2021, the effective date of the 

rule titled Tip Regulations Under the 

Fair Labor Standards Act (FLSA), 

published in the Federal Register on 

December 30, 2020, to allow the 

Department to review issues of law, 

policy, and fact raised by the rule before 

it takes effect. 

DATES: As of February 26, 2021, the 

effective date of the regulation titled Tip 

Regulations Under the Fair Labor 

Standards Act (FLSA), published in the 

Federal Register on December 30, 2020 

(85 FR 86756), is delayed until April 30, 

2021. 

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 final rule 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. 

Questions of interpretation or 

enforcement of the agency’s existing 

regulations may be directed to the 

nearest Wage and Hour Division 

(‘‘WHD’’) district office. Locate the 

nearest office by calling the WHD’s tollfree help line at (866) 4US–WAGE ((866) 

487–9243) between 8 a.m. and 5 p.m. in 

your local time zone, or log onto WHD’s 

website at https://www.dol.gov/ 

agencies/whd/contact/local-offices for a 

nationwide listing of WHD district and 

area offices. 

SUPPLEMENTARY INFORMATION: 

I. Background 

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 Department published Tip 

Regulations Under the Fair Labor 

Standards Act (FLSA) (the ‘‘Tip Rule’’) 

in the Federal Register to address these 

amendments. See 85 FR 86756. The Tip 

Rule would also codify the Wage and 

Hour Division’s (‘‘WHD’’) 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 was March 

1, 2021. See id. 

In a memorandum dated January 20, 

2021 titled ‘‘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 


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Federal Register / Vol. 86, No. 37 / Friday, February 26, 2021 / Rules and Regulations 11633 

1Commonwealth of Pennsylvania et al. v. Scalia 

et al., No. 2:21–cv–00258 (E.D. Pa., Jan. 19, 2021). 

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; 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 Feb. 

19, 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, on February 5, 2021, the 

Department published in the Federal 

Register the proposed delay of the 

effective date for the Tip Rule (86 FR 

8325) by 60 days to April 30, 2021. 

The Department explained that 

delaying the effective date of the Tip 

Rule would provide the Department 

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. The Department added that it 

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 its 

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, 

Attorneys General from 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.1 The complaint argues that the 

Tip Rule makes several changes to the 

Department’s regulations that are 

contrary to the FLSA and the CAA, 

specifically, the Tip Rule’s codification 

of WHD’s guidance regarding the tip 

credit’s application to tipped employees 

who perform tipped and non-tipped 

duties, the rule’s revisions to portions of 

its Civil Money Penalty (CMP) 

regulations on willful violations, and 

the rule’s imposition of a willfulness 

requirement for CMPs for section 

3(m)(2)(B) violations, and it argues that 

the Department failed to justify the 

changes made in the Tip Rule or 

consider the impact of these changes on 

workers. The delay of the Tip Rule’s 

effective date would also give the 

Department the opportunity to review 

and consider the rule in light of the 

issues raised by that complaint. 

The Department invited public 

comment on the proposed delay. The 

comment period ended on February 17, 

2021. 

II. Comments and Decision 

A total of 19 organizations timely 

commented on the notice of proposed 

rulemaking (‘‘NPRM’’) (86 FR 8325, 

February 5, 2021) during the 12-day 

comment period that ended on February 

17, 2021, which may be viewed on 

www.regulations.gov, document ID 

WHD–2019–0004–0475. The 

Department received comments from a 

broad array of stakeholders, including 

Attorneys General from eight states and 

the District of Columbia, a law firm, 

industry groups, non-profit 

organizations, and advocacy 

organizations. Seventeen commenters 

supported the Department’s proposal to 

delay the Tip Rule’s effective date. Two 

of the commenters opposed the 

proposed delay. 

Supporters of the proposed delay in 

the Tip Rule’s effective date stated that 

the rule raises questions of law, policy, 

and fact that warrant further review and 

consideration by the Department in 

accordance with the Regulatory Freeze 

Memo. Advocacy organizations such as 

the National Employment Law Project 

(NELP), Network Lobby for Catholic 

Social Justice, and the National 

Women’s Law Center stated that the 

Department should specifically 

reconsider the following changes, which 

they argued are harmful to workers and 

inconsistent with the FLSA and the 

CAA amendments: The Tip Rule’s 

codification of WHD’s guidance 

regarding the tip credit’s application to 

tipped employees who perform tipped 

and non-tipped duties; the Tip Rule’s 

revisions to portions of its CMP 

regulations on willful violations; and 

the Tip Rule’s incorporation of the 

CAA’s language regarding CMPs for 

section 3(m)(2)(B) violations into the 

Department’s regulations. Advocacy 

organizations and Attorneys General for 

eight states and the District of Columbia 

also stated that the Department should 

consider the issues of law raised in the 

January 19, 2021 complaint. 

The Economic Policy Institute 

supported the proposed delay because it 

would give the Department time to 

reassess the Tip Rule’s analysis of the 

economic impact of codifying WHD’s 

guidance regarding the tip credit’s 

application to tipped employees who 

perform tipped and non-tipped duties, 

which it argued was flawed. Multiple 

commenters, such as Restaurant 

Opportunities Center United and the 

Leadership Conference on Civil Rights, 

stated that the Department should delay 

the Tip Rule in light of the COVID–19 

pandemic, indicating that tipped 

workers have been particularly harmed 

by the pandemic and that it has led to 

a restructuring of the restaurant 

industry. Additionally, NELP stated that 

a delay in the Tip Rule’s effective date 

is appropriate to avoid additional 

compliance costs and training that 

employers would incur if the rule 

becomes effective and then is revised by 

the Department after its review. 

Two commenters opposed any delay 

in the effective date. The Center for 

Workplace Compliance (CWC) stated 

that it does not believe a delay in the 

Tip Rule’s effective date is necessary; it 

largely dedicated its comment to 

explaining why it supports the Rule. 

The Department disagrees; as discussed 

below, the Department concludes that 

supporters of the proposed delay have 

identified issues of fact, law, and policy 

raised by the Tip Rule that merit further 

review in accordance with the 

Regulatory Freeze Memo. The National 

Federation of Independent Businesses 

(NFIB) expressed its support for the Tip 

Rule as well, and stated that instead of 

delaying the rule’s effective date, the 

Department should allow it to go into 

effect and then consider whether to 

propose any changes. The Department 

disagrees with this approach. Allowing 


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11634 Federal Register / Vol. 86, No. 37 / Friday, February 26, 2021 / Rules and Regulations 

1Modernizing Recordation of Notices of 

Termination, 85 FR 34150 (June 3, 2020) (notice of 

proposed rulemaking; notification of inquiry). 

the Tip Rule to go into effect while the 

Department undertakes a further review 

of the Tip Rule could lead to confusion 

and uncertainty among workers and 

employers in the event that the 

Department proposes revisions to the 

rule following its review. 

In addition to opposing a delay in the 

effective date, the NFIB questioned 

whether this rulemaking could properly 

become effective before the Tip Rule’s 

original effective date. NFIB believes 

that a delay of the Tip Rule’s effective 

date must be published 30 days before 

it takes effect. The Department 

disagrees. Section 553(d) of the 

Administrative Procedure Act provides 

that substantive rules should take effect 

not less than 30 days after the date they 

are published in the Federal Register 

unless ‘‘otherwise provided by the 

agency for good cause found.’’ 5 U.S.C. 

553(d)(3). The Department finds that it 

has good cause to make this rule 

effective immediately upon publication 

because allowing for a 30-day delay 

between publication and the effective 

date of this rulemaking would result in 

the Tip Rule taking effect before the 

delay begins, which would undermine 

the purpose for which this rule is being 

promulgated and result in additional 

confusion for regulated entities. The 

Regulatory Freeze Memorandum was 

issued on January 20, 2021, only 40 

days before the Tip Rule’s original 

effective date of March 1, 2021. It would 

not have been practicable to issue an 

NPRM proposing to delay the Tip Rule 

and allow for ample time for public 

comment on that proposal in time to 

publish a final rule not less than 30 days 

before March 1. Moreover, this 

rulemaking institutes a 60-day delay of 

the Tip Rule, rather than itself imposing 

any new compliance obligations on 

employers; therefore, the Department 

finds that a lapse between publication 

and the effective date of this rule 

delaying the Tip Rule’s effective date is 

unnecessary. Because allowing for a 30- 

day period between publication and the 

effective date of this rulemaking is both 

unnecessary and impracticable, this 

final rule delaying the Tip Rule’s 

effective date is effective immediately 

upon publication. 

After reviewing timely comments 

submitted, the Department agrees with 

the supporters of the proposed delay in 

the Tip Rule’s effective date that the Tip 

Rule raises multiple issues of law, 

policy, and fact that warrant additional 

review and consideration in accordance 

with the Regulatory Freeze Memo. 

These issues include the Tip Rule’s 

codification of WHD’s guidance 

regarding the tip credit’s application to 

tipped employees who perform tipped 

and non-tipped duties; the Tip Rule’s 

revisions to portions of its CMP 

regulations on willful violations; the Tip 

Rule’s incorporation of the CAA’s 

language regarding CMPs for section 

3(m)(2)(B) violations into the 

Department’s regulations; and the Tip 

Rule’s analysis of the economic impact 

of codifying WHD’s guidance regarding 

the tip credit’s application to tipped 

employees who perform tipped and 

non-tipped duties. As numerous 

advocacy organizations and the 

Attorneys’ General for eight states and 

the District of Columbia noted in their 

comments, a delay in the Tip Rule’s 

effective date would also give the 

Department more time to review the 

issues of law raised in the January 19 

complaint. Allowing the Tip Rule to go 

into effect while the Department 

undertakes a review of these issues 

identified by commenters could lead to 

confusion among workers and 

employers in the event that the 

Department proposes to revise the Tip 

Rule after its review; delaying the Tip 

Rule would avoid such confusion. 

Additionally, the Department agrees 

with NELP that a delay in the Tip Rule’s 

effective date would prevent employers 

from incurring potentially unnecessary 

additional costs to familiarize 

themselves with the Tip Rule if the 

Department elects to propose revising 

the Tip Rule following its review. To 

give the Department additional time to 

review issues of law, policy, and fact 

raised by the Tip Rule before the Tip 

Rule goes into effect, the Department 

therefore finalizes the proposed delay in 

effective date. 

Signed this 24th day of February, 2021. 

Milton A. Stewart, 

Acting Secretary of Labor. 

[FR Doc. 2021–04118 Filed 2–24–21; 4:15 pm] 

BILLING CODE 4510–27–P 

LIBRARY OF CONGRESS 

Copyright Office 

37 CFR Part 201 

[Docket No. 2020–10] 

Modernizing Recordation of Notices of 

Termination 

AGENCY: U.S. Copyright Office, Library 

of Congress. 

ACTION: Final rule; statement of policy. 

SUMMARY: The Copyright Office is 

amending certain regulations governing 

the recordation of notices of termination 

to improve efficiency in processing. 

This final rule adopts regulatory 

language set forth in the Office’s June 

2020 notice of proposed rulemaking and 

notification of inquiry with some 

modifications in response to public 

comments. The Office also addresses 

public comments submitted in response 

to the subjects of inquiry published in 

the notification of inquiry. 

DATES: Effective March 29, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Regan A. Smith, General Counsel, by 

email at regans@copyright.gov, Kevin R. 

Amer, Deputy General Counsel, by 

email at kamer@copyright.gov, or 

Nicholas R. Bartelt, Attorney-Advisor, 

by email at niba@copyright.gov. Each 

can be contacted by telephone at (202) 

707–8350. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Copyright Office is in the midst 

of a multi-year modernization of its 

services and systems. One component of 

this comprehensive modernization 

initiative is the development of an 

online electronic system to process 

documents submitted for recordation, 

including notices of termination. In 

April 2020, the Office launched a 

limited pilot of this new system to allow 

pilot participants to submit certain 

transfers of ownership and other 

documents pertaining to copyright for 

recordation. Since then, the Office has 

recorded over 900 documents through 

the system while expanding 

functionality for the growing number of 

pilot users. Before implementing 

features to permit electronic recordation 

of notices of termination, the Office 

issued a notice of proposed rulemaking 

on June 3, 2020 (the ‘‘NPRM’’) to update 

its regulations governing recordation of 

notices of termination, clarify 

examination practices concerning 

terminations relating to multiple grants, 

and to solicit public comment on two 

related subjects of inquiry.1

A. Current Rules and Practices for 

Recording Notices of Termination 

In enacting the Copyright Act of 1976, 

Congress created a process for authors to 

reclaim previously-granted rights in 

their works by terminating grants after 

a period of years has elapsed. As 

explained in the NPRM, authors may 

accomplish this by selecting an effective 

date of termination within a five-year 

window that is set by statute, preparing 

a notice of termination containing this 

date and other information necessary to 

identify which grant(s) of rights in 

which work(s) are being terminated, 


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