Report: Labor Department hiding unfavorable report on impacts of tip-pooling rule

Report: Labor Department hiding unfavorable report on impacts of tip-pooling rule
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The Department of Labor is reportedly hiding an unfavorable report on its proposal to pool workers tips.

Bloomberg Law, citing current and former Labor Department sources, reported that department leaders scrubbed a report that showed employees could lose billions of dollars if it follows through on its plan to reverse the Obama-era ban on employers pooling workers’ tips.

According to the report, senior department officials ordered staff to revise the data methodology to lessen the expected impact and were still uncomfortable including later calculations that showed progressively reduced tip losses.

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The public has until Feb. 5 to comment on the proposal, which does not include the government’s analysis on the rule’s impact. The agency said in its proposal the “reallocation of tips may have implications on employment and earnings, as well as some impact on the tipping behavior of customers.”

"Due to data limitations, it is difficult to quantify these impacts,” it added, however.

A Labor spokesperson said in a statement that the department intends to publish an informed cost/benefit analysis as part of the final rule.

"As part of every rulemaking process, the department works to provide the public accurate analysis based on informed assumptions to productively engage in the notice and comment period," the spokesperson said.

"That is why, through the proposal, the Department requested public input regarding how to best quantify the costs and benefits in the [notice of proposed rulemaking]. Specifically, the Department welcomes comments that provide data or information regarding the potential benefits and transfers of this proposed rule, and has asked some specific questions that may help the Department quantify benefits and transfers in the Final Rule analysis.”

The Labor spokesperson said the department acts in accordance with the Administrative Procedure Act and does not comment on deliberative processes.

The proposal, backed by the National Restaurant Association, has been slammed by workers' rights advocates, who say it will allow employers to steal money that’s earned by and belongs to their employees.

The rule would change the Fair Labor Standards Act to allow employers to pool only 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 are not part of the proposal.

The National Employment Law Project (NELP) said in a statement that it’s deeply disturbed by reports that the Labor Department is hiding an unfavorable analysis of the rule after making statements about not being able to quantify its impact.

“Such disingenuous actions and statements fly in the face of the transparency needed to ensure that the regulatory process is reasonable, fair and consistent with the law,” said NELP’s executive director, Christine Owens.

“More importantly, covering up information about such negative implications for workers and papering over the action with misleading statements violates the agency’s mission ‘to foster, promote, and develop the welfare of the wage earners.’ ”

Owens said workers and advocates have been kept in the dark and called on the Labor Department to immediately withdraw the proposal.

The Economic Policy Institute (EPI) found in an analysis last month that employers could pocket $5.8 billion in gratuities earned by their employees each year as a result of the rule.

In a statement Thursday, the EPI said the Bloomberg Law report shows the lengths to which the Trump administration and Labor Secretary Alexander AcostaRene (Alex) Alexander AcostaTrump Jr. falsely claims that GDP growth never passed 2 percent under Obama Small businesses just scored a win on health-care costs RNC chairwoman, Labor secretary pull out of annual Latino conference MORE will go to hide the fact that they are taking steps to make workers’ lives worse.

“DOL should release its analysis immediately or, better yet, withdraw its proposal and refocus on its mission of serving working people, not big business,” Heidi Shierholz, the EPI’s senior economist and director of policy, said.