Withdraw the rule. Protect tipped workers.


February 1, 2018

Back in December, Voices for Human Needs reported on a proposal that would make workers’ tips the property of employers, which would harm an already vulnerable workforce made up mostly of women and, disproportionately, of women of color.
Studies out just last month show how much damage the proposed Department of Labor (DOL) rule could cause.  Tipped workers in the U.S. would stand to lose an estimated $5.8 billion in tips each year if the rule goes into effect – and women would bear the brunt of this loss, losing as much as $4.6 billion.  That’s according to a study published by the Economic Policy Institute.

Now it turns out that there are some things your government doesn’t want you to know.  Here’s an exclusive posted early this morning by Bloomberg Law:

Labor Department leadership scrubbed an unfavorable internal analysis from a new tip pooling proposal, shielding the public from estimates that potentially billions of dollars in gratuities could be transferred from workers to their employers, four current and former DOL sources tell Bloomberg Law.

The agency shelved the economic analysis, compiled by DOL staff, from a December proposal to scrap an Obama administration rule.  The Obama rule banned certain tip pooling arrangements that involve restaurant servers and other workers who make tips and back-of-the-house workers who don’t.  The proposal to reverse the Obama rule sparked outrage from worker advocates who said it would permit management to essentially skim gratuities by participating in the pools themselves.

Oh, it gets worse.  Not only did DOL try to cover up an analysis it found inconvenient; now it is lying about the existence of any such data.  In a Notice of Proposed Rulemaking, DOL claimed that 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.”

DOL’s actions have left labor advocates fuming, and rightfully so.  Says Christine Owens, Executive Director of the National Employment Law Project (note: NELP is a member of the Coalition on Human Needs and Owens serves on CHN’s Board of Directors):

“We are deeply disturbed to learn that the U.S. Department of Labor prepared but then concealed an economic analysis that inconveniently found that workers could lose billions of dollars in wages under a controversial DOL proposal to allow employers to keep their workers’ tips….

“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.

“America’s workers deserve a Department of Labor that puts their interests first at every juncture, and comports itself with the integrity and transparency necessary to that end.”

In a recent report produced by NELP and Restaurant Opportunities Center United, the groups stated that if the rule goes into effect, federal law would allow restaurant owners to confiscate all of the tips left by customers – without diners’ knowledge or consent – as long as restaurants pay their wait staff and bartenders at least the minimum wage.

The report found that servers and bartenders depend on tips for more than half of their earnings, with the median share of hourly earnings from tips accounting for 58.5 percent of wait staff’s earnings and 54 percent of bartenders’ earnings.  The median monthly tip earnings for wait staff and bartenders is only $867.

“Tips belong to the workers, and for good reason,” said Irene Tung, NELP Senior Researcher and co-author of the report.  “Workers depend on those tips to get by.  The fact that tips constitute more than half the earnings for restaurant servers and bartenders means that tips are more than just pocket money – tip earnings can be what a worker relies on to make rent or pay for child care.”

So what can you do? You can go here and enter the “submit a formal comment” button.  Demand that the Department of Labor withdraw its proposed rule.  Comments on the rule are due February 5, but DOL should hear right now that, in light of the suppressed findings that restaurants and other employers will pocket billions of dollars workers should be receiving, their proposed rule should be withdrawn.  You can view CHN’s letter to the Department of Labor here.

Tipped workers deserve the opportunity to earn a decent wage, and the DOL proposal denies them this opportunity.



Labor and Employment
tax cut
Tipped workers