Independent Contractor and Tip Credit Rules Likely to Be Postponed

Author: Michael Cardman, XpertHR Legal Editor

January 22, 2021

The pending independent contractor rules and tip credit rules will probably be postponed under the new Biden administration.

Currently, the tip credit rules and independent contractor rules are scheduled to take effect March 1 and March 8, respectively.

But the White House has issued a memo directing the US Department of Labor (DOL) and other federal agencies to consider postponing until March 23 any rules (such as the tip credit rules and independent contractor rules) that were finalized after the November 3 election but have not yet gone into effect.

The DOL also is encouraged to consider:

  • Reviewing any "questions of fact, law and policy" that the rules may raise;
  • Opening a 30-day comment period; and
  • Further delaying the rules beyond March 23.

If the DOL finds that the rules raise substantial questions, it should notify the White House and "take further appropriate action." Should that involve amending or revoking the rules, the DOL would need to go through the lengthy and laborious notice-and-comment regulatory process.

In a related development, nine state attorneys general have filed a lawsuit challenging the tip credit rule on the grounds that it conflicts with the Fair Labor Standards Act (FLSA) statute and that the DOL violated the rulemaking process by failing to adequately analyze the effect the rule would have on workers.