Labor Dept. Hid Report That Showed ‘Tip Pooling’ Harms Workers

Secretary of Labor R. Alexander Acosta

The DOL hid an internal analysis showing the rule change could cost tipped workers billions in gratuities.

Late last year, the Trump administration moved to change how tips are managed in the restaurant industry, allowing tips to be shared among employees and opening the door for owners to pocket the tips themselves.

It is now being reported that in reaching its decision, Trump's Department of Labor intentionally withheld from public view an internal analysis showing that tipped employees would be harmed by the shift in policy - to the tune of billions of dollars in gratuities.

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.

What did the analysis show?

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.

In the end, workers, businesses, advocacy groups, and the public at large are missing a key piece of government insight as they determine how to comment on the proposal.

The new revelation lends credence to concerns from Democrats and labor organizers that the proposed rule will short change workers. It also raises questions about how much the DOL intends to take public feedback into account in shaping a final version of the rule.