Tip-Pooling Will Cost Workers Billions, According to Hidden Labor Department Data

As the debate around tip pooling continues, new evidence shows the Department of Labor hid data from the public that revealed its proposed regulations would cost restaurant workers billions of dollars, Bloomberg Law reports.

The Department of Labor reportedly conducted an analysis indicating that, if tip pooling was made legal again — that is, if restaurant owners were allowed to collect servers’ tips and redistribute them as they see fit, including being allowed to pocket them — it would transfer billions of dollars’ worth of gratuities from workers to business owners. These findings were left out of the department’s December proposal to reverse the Obama administration rule that banned tip pooling, sources in the department tell Bloomberg.

Senior Department of Labor officials reportedly “ordered staff to revise the data methodology to lessen the expected impact.” Still dissatisfied with the results, they ultimately got approval from the White House to leave the analysis out of the proposal altogether.

In a statement, Christine Owens, executive director of the National Employment Law Project, wrote that her team is “deeply disturbed to learn that the U.S. Department of Labor prepared but then concealed [this] economic analysis... [and] then deceptively stated... that it is ‘unable to quantify how customers will respond to the proposed regulatory changes’ and ‘currently lacks data to quantify possible reallocations of tips.’”

“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. “The Department’s cover-up has kept workers and their advocates, along with many other stakeholders, in the dark about critical evidence related to the impact of the proposal, which is already deeply unpopular with voters. The only appropriate remedy is to withdraw the rule, and NELP calls on the Department of Labor to do so immediately.”

As previously reported, the proposed regulations would mean that employers who pay their employees at least the full minimum wage (not the tipped minimum) would be permitted to collect any and all tips earned by their staff. It would then be up to the employer to decide what to do with them: They could share the tips between servers and back-of-house employees, redistribute them to managers, keep the tips for themselves, or keep them for the business itself.

Restaurant workers don’t need an economic analysis to know that tip pooling would be disastrous for their bottom lines. Hundreds of thousands of comments have been posted online in opposition to the proposed regulations, with many likening tip-pooling practices to outright theft. The comment phase ends February 5, at which point the government has at least 60 days to decide how to proceed.

• Labor Dept. Ditches Data on Worker Tips Retained by Businesses [Bloomberg Law]
• Americans Are Not Happy With Trump DOL’s Tip-Pooling Proposal [E]