A furor recently erupted over a new Department of Labor rule that would allow employers to mandate “tip pools” in the service industry. This would theoretically spread tips among all hourly staff, but there’s a quasi-loophole — employers could pocket tips without disbursing them — that allows them to snatch billions from worker’s pockets. Of course, this rule hasn’t gone over well, and it now looks like the Department of Labor preemptively tried to erase their bad look.
The move, which rolls back an Obama-era rule mandating that tips are owned those who earn them, seems to have been justified to further compensate the back-of-the-house employees who generally don’t see tips. Yet actually, the rule would benefit employers, who would not only be able to keep pool money but also no longer have to pay those back-of-the-house workers minimum wage (as long as tips brought those workers up to minimum wage). Bloomberg News now reports that the Dept. of Labor scrambled to cover up the expected impact:
Senior department political officials — faced with a government analysis showing that workers could lose billions of dollars in tips as a result of the proposal — ordered staff to revise the data methodology to lessen the expected impact, several of the sources said. Although later calculations showed progressively reduced tip losses, Labor Secretary Alexander Acosta and his team are said to have still been uncomfortable with including the data in the proposal. The officials disagreed with assumptions in the analysis that employers would retain their employees’ gratuities, rather than redistribute the money to other hourly workers. They wound up receiving approval from the White House to publish a proposal Dec. 5 that removed the economic transfer data altogether, the sources said.
So, the White House was apparently on board with hiding the unflattering data that suggested employers would benefit from tip pooling on multiple grounds, including directly taking money out of the pools. All of this makes one wonder what Fair Labor Standards Act regulations may also be on the chopping block. After all, the Trump administration — under the guise of doing away with unnecessary regulations — already moved to let an overtime pay rule that was established by Obama wither on the vine.
While these tactics will please business owners (who donate plentifully to campaigns that favor them), there are plenty of voters who will feel otherwise without their tips and overtime pay.
(Via Bloomberg Law & LA Times)