White House reviewing proposal to kill Obama rule on workers’ tips

A Labor Department proposal to kill an Obama-era rule preventing employers from pooling workers’ tips is now under White House review.

The White House Office of Information and Regulatory Affairs (OIRA) received the proposed rule from the Labor Department on Tuesday according to the list of regulations under review.

In the semi-annual Unified Regulatory Agenda in July, the agency announced plans to rescind the current restriction on tip pooling by employers that pay tipped employees the full minimum wage under the Fair Labor Standards Act. The change would allow restaurants, for example, to share the tips waiters receive with untipped workers, such as cooks.

{mosads}

The National Restaurant Association has long been pushing for the change. The group argues the rule finalized under former President Barack Obama created pay disparity between servers in the front of the house and the cooks in the kitchen.

It does not appear the Labor Department will allow employers to pool the tips of employees who make less than minimum wage, but the agency’s proposal has not yet been made public.

Worker rights advocates, though, have blasted the proposed change, saying the administration is once again catering to business and corporate interests over workers.

In a statement Wednesday, Christine Owens, executive director of the National Employment Law Project, said tips belong to the worker who earns them.

“The Trump Labor Department may say that it’s taking away this protection to let some employers redistribute tips freely to all employees, regardless of whether they are tipped workers or not,” she said. “But if companies have trouble retaining non-tipped workers because their pay is so bad, then the solution is for the companies to raise their wages, not to essentially steal what tipped workers take home at the end of the day.”

Owens fears the rule opens the door for employers to pocket a portion of the tips.

“The Labor Department and the National Restaurant Association can dress this up any way they want to, but ultimately, this rule change is nothing more than robber barons masquerading as Robin Hood—not to mention that it absolves employers of their responsibility to fairly and adequately pay their employees,” she said.  

Once OIRA signs off on the proposed rule it will be published in the Federal Register and the agency will accept public comments. 

OIRA has 90 days to review the rule, but can take longer.