DOL Extends Comment Deadline on Proposed Tip Pooling Rule Amid Pressure
The U.S. Department of Labor announced Tuesday that it is extending the deadline for the public to make comments on its newly proposed changes to tip pooling rules from 30 days to 60 days. This move comes after Labor Secretary Alexander Acosta received a letter from 46 Democrats from the House of Representatives, which stated that the 30-day period for comments was too short, since the DOL did not release a quantitative analysis of the impacts the rule would have on 1.3 million workers.
The proposed rule would give restaurant leaders more power to decide who should receive tip shares than the current Obama-era rule, which the Trump administration stopped enforcing in July. This rule dictated that only guest-facing employees could receive portions of the tips. The new rule, however, would allow back-of-house workers to receive shares of tips, which could help balance a growing disparity in compensation between servers and kitchen staff.
Proponents of the rule argue that it would help restaurants keep doors open as they can more easily pay back-of-house workers amid rising labor costs. The National Restaurant Association—which sued the DOL when the Obama Administration’s rule went into effect and appealed to the Supreme Court this year, though the case has not yet been heard—is in favor of the proposed guidelines.
Opponents, however, have criticized one provision within the law, because it would also make it possible for restaurants to keep tips instead of paying them out to staff, as long as employees are paid the federal minimum wage. This practice was also banned by the Obama administration’s 2011 rule. Though the new rule also requires workers to make the minimum wage, either in wages or through a combination of wages and tips, economists have warned at the impact to workers if this rule were passed.
In 2009, the Center for Urban Economic Development reported that 12 percent of workers who received tips had them stolen by employers. Economic Policy Institute economists project that restaurant owners in the U.S. could keep between $523 million and $14.2 billion in worker tips per year, with $5.8 billion being their best estimate of how much would be kept.
Public comments will now be taken until February 3, 2018, and the public is encouraged to submit data to the Department of Labor before that time. After this period, the DOL will vote on the rule.