The Office of the Inspector General (OIG) for the Department of Labor (DOL) announced Monday that it will audit the Department’s rulemaking process for its proposed tip rule after a report from Bloomberg BNA that the Department intentionally hid its own economic analysis showing that the proposed rule would cost tipped workers billions of dollars in income.
Labeled a “Tip Stealing” rule by workers’ rights advocates, the proposed rule would allow employers to pocket employees’ tips for themselves so long as they pay those employees the federal minimum wage—currently $7.25 per hour. The Department of Labor announced the proposed rule in December and asked for public comment. In its announcement, the DOL claimed that it could not quantify how the proposed rule would affect total tipped income or how the rule would impact reallocation of tips, from employees to employers.
Yet, on Thursday, Bloomberg reported that the DOL did perform—but then actively concealed—its own economic analysis showing how tipped workers would lose billions of dollars. Workers’ and women’s rights groups, such as the National Employment Law Project, Restaurant Opportunities Centers (ROC) United, the Institute for Policy Studies (IPS), the National Women’s Law Center, and the Feminist Majority, along with Senator Patty Murray (D-WA) and Congressman Bobby Scott (D-VA), demanded that the DOL withdraw the proposed rule immediately. Attorneys general from 17 states, led by Xavier Becerra of California, noted that, if the reports are true, that the Department’s conduct would violate federal law.
The public comment period for the proposed rule ended on February 5, four days after the public learned that DOL was intentionally hiding unfavorable data.
Workers’ rights groups, led by ROC United, held a protest outside of DOL headquarters on Monday demanding: “Trump Don’t Steal Our Tips.” The DOL received hundreds of thousands of comments from the public in opposition to its proposed rule, which is expected to hit women the hardest. The Economic Policy Institute estimates that the proposed rule would cost tipped workers $5.8 billion per year in tips, with women—who make up nearly two-thirds of tipped workers nationwide—losing $4.6 billion per year. Women of color would be particularly impacted as they are disproportionately represented among tipped workers. The loss of income could have devastating effects for tipped workers. Already, poverty rates for tipped workers is more than twice as high for workers overall.
The proposed rule has also been blasted for how it could make women workers even more vulnerable to sexual harassment, especially in the restaurant industry. In a 2014 report, The Glass Door: Sexual Harassment in the Restaurant Industry, ROC United and Forward Together found that sexual harassment in the restaurant industry is pervasive among tipped workers. Reliant on tips to survive, these workers often feel forced to tolerate sexual harassment from customers, managers, and co-workers. Giving employers a direct interest in an employee’s tips could make that situation even worse.
Now that the comment period is over, the DOL is free to move forward in the rulemaking process, even as the OIG conducts its audit. Advocates are therefore asking that the public comment period be extended until after the OIG issues a final report of its audit.
Media Resources: Department of Labor Office of the Inspector General 2/5/18; Feminist Newswire 2/1/18; Economic Policy Institute 1/17/18; ROC United
