Labor Department IG to investigate tip pooling rule

Labor Department IG to investigate tip pooling rule
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The Department of Labor’s Office of Inspector General announced Monday it will look into the agency's rulemaking process in issuing its proposed tip-pooling rule.

The OIG on Twitter shared a memo it sent to Bryan Jarrett, acting administrator of the Labor Department's Wage and Hour Division, on Monday.

“The Office of Inspector General is initiating an audit of the rulemaking process used by the Wage and Hour Division related to its proposal to rescind portions of its tip regulations issued pursuant to the Fair Labor Standards Act,” Elliot Lewis, assistant inspector general for audit, wrote.

The audit follows a Bloomberg Law report that senior agency officials hid an unfavorable economic impact analysis from the proposed rulemaking. The analysis reportedly showed workers could lose billion of dollars in gratuities if the agency rescinds an Obama-era ban on tip pooling.

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The proposed rulemaking would change the 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, and share them with non-tipped workers.

The agency’s proposal did not include employees who make less than the federal minimum wage and earn tips to supplement their pay, known as a tip credit.

Critics said the rule is anti-worker and will allow employers to steal tips earned by their employees.

In a statement, Christine Owens, executive director of the National Employment Law Project, praised the OIG for its decision to conduct an audit of the rule.

“After learning that senior political officials within the Labor Department ordered a damaging economic analysis of this proposal to be shelved and concealed, we have grave concerns about the integrity of the regulatory process and whether the department is fulfilling its mission to ‘promote the welfare of wage earners in the United States,’” she said.

“It is appropriate for the OIG to conduct an impartial investigation into this matter. We hope and expect that the Wage and Hour Division and all officials at the Labor Department will fully cooperate with this audit.”