Labor Department proposes rollback of tip-pooling rule


A waitress serves customers in New York in May 2013. Victor J. Blue / Bloomberg via Getty Images file

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Employers who pay the tipped minimum wage, which is lower than the standard minimum wage of $7.25 per hour, can’t pool tips and share them with non-tipped workers under current law. The Obama administration rule, which was adopted in 2011, also banned the practice for businesses that pay the higher minimum wage.

The ban on tip-pooling is the latest labor regulation that opponents say are designed to target workers.

The Labor Department in July also took the first steps toward repealing an Obama administration rule that would have

extended mandatory overtime pay to more than 4 million workers. And in August, the administration blocked a rule that would have required companies to report employee wage data broken down by sex and race.

Tipped workers are among the most vulnerable employees in the country, said Saru Jayaraman, president of the union-backed Restaurant Opportunities Centers United. Repealing the rule would leave them even worse off, she said.

“By allowing employers to take control of their employees’ tips, this regulation would push a majority-women workforce … further into financial instability, poverty, and vulnerability to harassment and assault,” she said in a statement.

A spokesman for the Labor Department didn’t immediately respond to a request for comment.

The rule has been criticized by industry groups who say tip pooling is necessary to address the compensation gap between servers, who have been earning more as food prices increase, and untipped colleagues in the kitchen.

But the Trump administration could face legal challenges from workers’ rights groups.

Christine Owens, executive director of the National Employment Law Project, said in a statement that the proposal didn’t indicate how much money tipped workers could lose if the rule were eliminated, which is required by federal law.

The Supreme Court is considering whether to review a challenge to the tip-pooling ban by the National Restaurant Association and other groups.