Democratic lawmakers are calling on the Labor Department to withdraw proposed changes to federal rules on tipping, saying a report saying that the department shelved a negative economic analysis of the proposal raises ethical questions.
The proposed rule would allow restaurant owners to claim tips given to waiters and bartenders, a move the Labor Department say would allow employers to redistribute money to non-tipped workers such as cooks and dishwashers. Critics charge the move would allow employers to keep the tips for themselves.
"I am deeply troubled by allegations that the Department of Labor may have withheld estimates that workers would lose billions in tips each year under the department’s proposed rule. If true, this would not only reflect a departure from the normal process, but raise serious questions about the integrity of the department’s rulemaking process," said Rep. Bobby Scott of Virginia, the top Democrat on the House Education and the Workforce Committee.
Scott was reacting to a Bloomberg report Thursday citing anonymous sources that said senior department officials ordered staff to revise reports that assumed a large portion of employers would keep potentially billions of dollars in tips for themselves. The reports were revised but later dropped altogether when the department published its proposal Dec. 5, the first step in the official rulemaking process. Scott said he would ask the department to share all economic analysis regarding the proposed rule.
Tipping has become a controversial issue, particularly in the restaurant industry, because employees who interact with customers such as waiters and bartenders can make substantially more than "back of the house" workers like cooks and dishwashers, especially in states with a high minimum wage. Many owners claim that they can't find people for non-server positions because of it.
Under federal law, tips are the property of the person who receives them, but the restaurant industry has lobbied to change that, arguing that allowing employers to redistribute the tips among all workers would be fairer and resolve conflicts. They concede that it also would allow employers to potentially keep the tips for the themselves, but they argue that the labor market is so tight few would take the risk of losing staff by doing so.
Critics have charged there's no reason to believe that many employers wouldn't keep the tips for themselves and seized on Thursday's report as proof the department's own analysts share this concern.
"This revelation is particularly frustrating because it comes after numerous requests for department officials to release a quantitative analysis of its proposed rule. It now turns out that the department had completed that analysis, but it did not like the findings," said Rep. Mark Takano, D-Calif.
A Labor Department spokesman who requested anonymity stressed that the department was in the early stages of the rulemaking and was still gathering economic data. "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."
