- The U.S. Department of Labor (DOL) omitted an internal analysis from its December proposal to rescind Obama-era tip pooling rules, Bloomberg BNA reports.
- The analysis, conducted by DOL staff, showed that workers would potentially lose out on billions in gratuities should DOL's proposal take effect, anonymous DOL sources told BNA. Senior agency officials reportedly ordered revisions to the analysis, but still decided to exclude it from the proposal even as the calculated impact on workers fell.
- BNA says senior officials disagreed with assumptions — namely, that employers would keep workers' tips for themselves rather than distribute the gratuities among all staff — made by analysts. A DOL spokesperson responded to the report in part by saying that "the Department intends to publish an informed cost benefit analysis as part of any final rule." The public comment period for the proposal ends Feb. 5.
The rescission of the 2011 tip pooling regulations has been on the Trump administration's agenda for some time. The rule limited the extent to which employers could require tipped workers (servers, for example) to share gratuities with non-tipped workers (such as dishwashers).
The rule was deemed invalid by one federal appeals court last year, creating circuit split which has yet to be resolved. In the meantime, DOL began the rulemaking process required to rescind those rules and published its Notice of Proposed Rulemaking (NPRM) Dec. 5. Experts also have warned that, should DOL roll back the rule, states may step in with their own laws.
The report about DOL's decision to exclude the aforementioned analysis from its NPRM drew backlash from Christine Owens, executive director of the National Employment Law Project. In a statement, Owens said the organization was "deeply disturbed" by the news, calling the DOL's actions a "cover-up."
"Such disingenuous actions and statements fly in the face of the transparency needed to ensure that the regulatory process is reasonable, fair and consistent with the law," Owens wrote. "More importantly, covering up [sic] information about such negative implications for workers and papering over the action with misleading statements violates the agency’s mission ‘to foster, promote, and develop the welfare of wage earners.’"
For now, including non-tipped workers in tip pools may pose a significant risk for employers, as the U.S. Supreme Court could weigh in on the issue, too. Should a tip pool be deemed invalid under the Fair Labor Standards Act, employers could be on the hook for minimum wage, back overtime pay and damages for all employees involved.