Report: Trump officials overrule regulatory czar in releasing tip pooling rule

Labor Secretary Alex Acosta convinced Office of Management and Budget (OMB) Director Mick Mulvaney to overrule the nation’s regulatory czar and release a controversial tip pooling rule despite data showing workers could lose billions in gratuities, according to a new report.

Bloomberg Law, citing three current and former executive branch officials, reported that Mulvaney sided with Acosta over the Office of Information and Regulatory Affairs (OIRA), which is led by Administrator Neomi Rao.

OIRA, which is a part of the OMB, is tasked with reviewing and signing off on draft proposed and final rules.

{mosads}Democrats, consumer groups and attorneys general in 17 states have demanded the agency withdraw the rule after it was reported the Labor Department had withheld an unfavorable report on the economic costs from the proposal it released publicly in December.

The rule would change the Fair Labor Standards Act to allow employers to pool the tips of workers who make at least the federal minimum wage, which is $7.25 an hour. Employees who make less than the federal minimum wage and earn tips to supplement their pay were not part of the proposal.

But progressive groups like the Economic Policy Institute (EPI) and the National Employment Law Project say the rule lacks a safeguard to stop an employer from stealing a percentage of the workers’ tips.

According to Wednesday’s report, Acosta and his team pushed the proposed rule to Mulvaney for approval after Rao and her staff attempted to block the Labor Department from issuing it.

Rao wanted the department to go back and include the estimates on how much in tips workers could to their bosses, the report said.

Though Rao was initially opposed publishing the regulation without the analysis, the report said sources could not rule out the possibility that administration officials later persuaded her to.

In a statement to The Hill, a Department of Labor (DOL) spokesperson said the department does not comment on deliberative processes.

OMB spokesperson Coalter Baker said the in an email the office historically does not comment on the deliberative process as well, but is making an exception in this case.

“We will make an exception now, as the premise of this reporting is false: there is zero daylight between Director Mulvaney and Administrator Rao on regulatory policy,” he said.

Heidi Shierholz, the EPI’s senior economist and director of policy, said Bloomberg Law’s report shows the lengths to which Acosta will go to hide the fact that under his watch the agency is taking steps to actively make workers’ lives worse.

“Acosta should withdraw DOL’s proposal that would make it legal for employers to take workers’ tips,” she said in a statement. “He should focus on things that promote DOL’s mission of serving working people, not undermining their earnings.”

EPI found in an analysis of its own in January that employers could pocket $5.8 billion in gratuities earned by their employees each year as a result of the rule.

–This report was updated at 1:06 p.m.