Flickr / Dave Dugdale
The rule, which would transfer control of tips from workers to restaurant owners, is facing backlash from multiple directions.

Culture Labor News

You may have seen “tip-pooling” in the news with increasing frequency as of late. While conversation around the much-disputed restaurant practice has been simmering in the past few months, last week, the pot boiled over.

Tip-pooling, by the way, refers to the practice of sharing tips between front-of-house-staff (like waiters and bartenders) and back-of-house-staff (like line chefs and dishwashers). Proponents of the practice say that it leads to pay equity among staff. Opponents argue that it allows restaurant owners to pocket tips for themselves.

Here’s what studies say: Last month, the left-leaning Economic Policy Institute estimated that tipped food and restaurant workers stand to lose $5.8 billion in total if the proposal is implemented. And women will be disproportionately affected—losing out on as much as $4.6 billion in wages. The institute also argued that the term “tip-pooling” is a misnomer. Sure, employers—backed by DOL—could choose to split tips between front- and back-of-house staff. And on the surface, that looks like equity. But there is no legal mechanism that requires employers to do that. This means that, so long as employees are paid a minimum wage, employers and managers could very well just pocket all tips. In this way, it’s less tip-pooling, and more tip-taking.

Read our reporting on the legal history of tip-pooling here.

Of course, there’s also some political history here. In 2011, DOL under President Obama insisted that tipped workers—not restaurant operators—had ownership of gratuities, according to the Fair Labor Standards Act (FLSA). In doing this, the agency essentially banned tip-pooling.

But last year, after the Trump administration took office, DOL flipped its stance on the practice and signalled that it would not maintain the Obama-era interpretation of the FLSA. Then, in December of last year, DOL put forth a new rule to allow tip-pooling.

Next, it asked the public what it thought about that during a comment period that ended on Monday.

And now, the people have spoken—over 374,000 of them, to be precise. Verdict? They’re not happy.

One common, somewhat scripted sounding public comment (which likely originated on one resistance website and was then cloned over and over) read: “I object to this rule. It’d go against decades of federal and state law and precedent, which has safeguarded tips as the property of the workers who receive them.” Other commenters added personal stories that spoke to the effect  tip-pooling could have on their incomes. “My father was a taxi driver who basically worked for tips. He worked 14 hours a day to cover enough for the family. Imagine if he had to share his tips with the taxi owner in addition to giving 56% of the fares to the owner! How many more hours would he have had to work?” asked Sheri Bretan from Arizona.

Which isn’t to say that there weren’t any comments in favor of the proposal. A quick search of the comments for the phrase “I support” produces 310 results. Of these, another seemingly scripted talking point resurfaces again and again: “I am a restaurant operator, and I support the U.S. Department of Labor’s proposal to allow tip pools that include kitchen staff so long as a restaurant does not take a tip credit and all individuals in the tip pool have regular cash wages of at least the full minimum wage.”

This rule could result in less tip-pooling and more tip-taking.
The restaurant lobby has also argued in favor of tip-pooling. Last year, the National Restaurant Association (NRA) petitioned the Supreme Court to take a stance on the legality of the practice. And as we reported in November of last year, the association has publicly said that changes to labor law, including a ban on tip-pooling, should be legislated through Congress, not decided at agency level.

Now, to throw a monkey wrench into the middle of an already spirited dinner party, the DOL proposal met fresh controversy again on Thursday of last week, after Bloomberg Law reported that the agency had hidden unfavorable data on the economic effect the rule would have on workers. According to the story, DOL conducted an economic analysis before announcing its proposal in December, the results of which showed that workers could stand to lose billions under the rule. Senior DOL officials allegedly ordered staff to re-analyze the numbers in an effort reduce the estimate, before Labor Secretary Alexander Acosta reportedly ordered all data to be scrapped from the proposal.

The public’s reaction to the Bloomberg story has so far been unremarkable. But on Friday, DOL’s Office of the Inspector General launched an investigation into its findings. On the same day, Democratic members of the House Committee on Education and the Workforce wrote a letter to Acosta, demanding to see by Monday any analyses DOL has conducted on the rule.

Also on Monday, 120 House Democrats signed a letter to DOL to rescind the proposal, arguing that “DOL’s proposed rule is contrary to Congressional intent, renders provisions of the FLSA meaningless, and lacks a quantitative analysis to demonstrate its benefits justify its costs.”

And a coalition of Attorneys General, led by California AG Xavier Becerra, wrote a letter to Acosta, demanding a retraction of the proposed rule. They argue that tips are culturally understood by customers to be the property of workers, and that, should DOL move forward with the proposal, it “should at least explicitly bar employers from participating in tip pools or retaining any portion of employee tips.”

As of late Tuesday, DOL has said nothing in response. So, the question remains: Can DOL read a dining room?

We’re about to find out.

Jessica Fu

Jessica Fu

Jessica is a news producer and reporter for The New Food Economy. Reach her by email at: jessica.fu@newfoodeconomy.org