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30-day comment period ticks away on proposed tip-pooling rule change

December 12, 2017

The 30-day comment period is ticking away on a proposed FLSA rule change that would allow employers to pool their minimum wage employees' tips. The Department of Labor proposal was published Dec. 4 and while some —  like the National Restaurant Association applaud the rule —  others see it as something of a reverse-Robin Hood scheme that could take tips from the lowest paid employees and put them in restaurant owners' pockets. 

The authors of an editorial in Newsweek last week said that the rule change allows restaurant owners to collect all tips "and do whatever they want with them — regardless of what diners intended. … Restaurant owners could even keep all the tips for themselves, without telling diners."

The editorial — contributed by Sharon Block, Harvard Law School's director of labor and worklife program,and National Employment Law Project Executive Director Christine Owens — said restaurant servers had a median hourly wage of under $10, according to the Bureau of Labor Statistics most recent  2015 numbers. 

"This is a bad policy that the administration is trying to hide behind a very bad process," the women wrote in the magazine. "Despite the fact that the law requires it, the Labor Department's proposal includes no estimate of how much money in tips will be transferred from servers to restaurant owners—many of which are big corporations, not mom and pop — as a result of the rule. Instead of providing an estimate, the proposal provides numerous excuses for hiding the rule's real impact from the public."

The Department of Labor said it's not providing those because there is no way to know how each owner will use pooled tips. The editorial's authors rebut that by saying that the DOL can still give estimates of the amount of money potentially changing hands if the regulation is changed. 

Though the NRA did not respond to this site's questions about the Notice of Proposed Rulemaking, as it is officially referred to by the Department of Labor, it did issue this statement at the time the notice was issued:

"We applaud the Department of Labor's review of tip regulations," the NRA's Restaurant Law Center Executive Director Angelo Amador, said in the statement. "We look forward to submitting comments from the restaurant industry on the new rule-making.”

In the editorial, the labor executive authors pointed out that both Labor Secretary Acosta and Office of Information and Regulatory Affairs Administrator Neomi Rao have previously supported full disclosure of cost-benefit analyses behind even deregulatory actions. The editorial implores the public to demand such information before any action is taken on the rule change.