What DOL Regulatory Changes Are Expected for Tip Credit, Child Labor, and Domestic Workers?

Several key US Department of Labor (DOL) regulations affecting tipped workers, minors, and domestic service employees are expected to be proposed within the next 100 days. This follows the DOL's submission of draft rules to the White House Office of Management and Budget (OMB) for final review, a critical step in the federal regulatory process. These potential changes could significantly impact employer compliance requirements in the hospitality, retail, and home care sectors.

What Changes Are Coming to the Tip Credit Rule?

The draft regulation titled "Tip Regulations Under the Fair Labor Standards Act (FLSA); Rescission of Dual Jobs" signals a potential overhaul of how the tip credit is applied. The tip credit is a provision that allows employers to pay tipped employees a lower direct cash wage, as long as the employee's tips bring their total earnings up to at least the federal minimum wage. The central issue involves "dual jobs," where an employee works in both a tipped and non-tipped role for the same employer, such as a server who also performs cleaning duties.

This new rule will likely address the vacuum left by the repeal of the "80/20 Plus 30" rule in 2023. That previous rule limited the amount of time a tipped employee could spend on non-tipped duties. Based on our assessment experience, the DOL may introduce new, clearer guidelines for employers to determine when the tip credit can be taken, aiming to reduce compliance confusion and litigation.

How Might Child Labor Laws Be Updated?

The DOL's intent to update child labor protections is clear from the draft's title: "Amending Child Labor Hours of Work and Hazardous Occupation Standards under the Fair Labor Standards Act." This suggests potential changes to two key areas:

• Hours of Work: Regulations governing the times of day and number of hours minors are permitted to work.
• Hazardous Occupations: The official list of jobs deemed too dangerous for workers under the age of 18.

This regulatory push occurs amid increased scrutiny of child labor violations nationwide. The updated rules could impose stricter limitations on work hours for teenagers and potentially expand the list of prohibited hazardous occupations, directly affecting industries like manufacturing, construction, and agriculture that employ younger workers.

What Does the Domestic Service Regulation Mean for Home Care?

The draft rule, "Application of the Fair Labor Standards Act to Domestic Service," marks the first potential update since 2015 regarding the classification of workers who provide companionship services. These are employees who provide fellowship, protection, and care for the elderly or individuals with illnesses or disabilities. The classification is critical as it determines eligibility for minimum wage and overtime pay under the FLSA.

The update will likely provide clearer tests for distinguishing between true companionship services (which may have exemptions) and more comprehensive medical or care services (which are generally covered by FLSA protections). This aims to ensure proper wages for domestic workers and reduce misclassification risks for employers in the home care industry.

To prepare for these potential changes, employers should:

• Monitor the Federal Register for the official publication of the proposed rules.
• Conduct an internal audit of current pay practices for tipped employees and those working in dual roles.
• Review scheduling and job assignments for minor employees against existing federal and state laws.
• Assess the duties of domestic service workers to ensure proper classification under current standards.

While the exact details of these regulations will become clear upon their official proposal, their advancement signals a significant shift in federal labor enforcement priorities. Proactive review of current practices is the most effective strategy for ensuring compliance.