Labor Dept. Allegedly Hid Study Unfavorable to Proposal on Tip Pooling

The Trump administration’s Labor Department leadership hid an unfavorable internal analysis on a proposal regarding the pooling of restaurant tips, effectively shielding the public from estimates suggesting that employees could lose billions of dollars in tips, four current and former Labor Department sources told Bloomberg Law. Data in the analysis suggests that the proposal would make it easier for restaurant owners and managers to profit at the expense of their workers.

Bloomberg Law reports:

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

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.

The Labor Department “works to provide the public accurate analysis based on informed assumptions,” a department spokesperson told Bloomberg Law in an email. The spokesperson noted that the department asked the public to comment during a feedback period, which ended Monday. However, because the analysis was not made public, those wishing to weigh in on the proposal had to do so without seeing the estimated figures first.

The spokesperson told Bloomberg Law that the department will “publish an informed cost benefit analysis as part of any final rule.”

According to New York magazine, Trump administration officials said the tip-pooling rule would help increase the paychecks of low-wage kitchen workers, but the proposal would also allow restaurant owners to withhold tips for themselves. The magazine reports:

While the measure empowers businesses to collect their tipped employees’ gratuities — and encourages them to redistribute that cash back to workers, in a manner that cuts non-tipped workers in on the deal — the rule doesn’t actually require businesses to give the money back.

It is hard to understand why a fervently pro-dishwasher administration would omit such a requirement. After all, there is no cause for thinking that “market forces” (i.e., competition for waitstaff) would be enough to prevent employers from stealing tips — at present, even laws against stealing tips aren’t enough.

The Trump administration has a history of making it harder for fast-food workers to organize, and it removed a requirement that employers log workplace injuries. The administration has also benefited from a lucrative relationship with the National Restaurant Association.

Terry Schwadron, DCReport.org’s New York editor, wrote: “Indeed, this feels like another plank in the platform of deregulation of anything facing business. Corporations are just supposed to post a big ‘Trust Me’ sign outside their headquarters, and consumers and workers are supposed to silently comply, and worry only about how to spend their modest tax cut monies.”