From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...
By Ben Penn
Sen. Jeff Merkley (D-Ore.) stands with worker advocates opposing the Labor Department’s move to reverse an Obama-era tipping rule that declared tips to be the property of the employees who receive them. More than six years earlier, however, he wrote the agency seeking clarity on employer concerns about the regulation.
“I have heard significant concerns from restaurant owners and managers in Oregon about new Department of Labor rules on tip pooling and tip crediting” and their apparent contradiction with a court ruling, Merkley wrote In a 2011 letter obtained by Bloomberg Law. The Oregon Democrat went on to ask the DOL to “provide clarification for employers in the 9th Circuit with regard to what portions of the new rule do and do not apply.”
Fast forward to this month, when the Trump administration’s DOL proposed rescinding the earlier regulation, which had forbid certain tip-sharing arrangements between restaurant servers and cooks. The rescission proposal has drawn outrage from worker-advocacy groups such as the National Employment Law Project and Restaurant Opportunities Centers United, which hosted a Capitol Hill news conference Dec. 12 to demand the DOL reconsider the proposal. They argue the DOL has gone too far by specifically proposing language that would enable restaurants not to just allow tip-sharing, but to pocket their employees’ gratuities.
“Here comes team Trump, and they say, ‘We’re on the side of the powerful against the people,” Merkley said, while standing with restaurant employees and representatives from NELP, ROC United and the Economic Policy Institute. “Tell the restaurant owners to keep their hands off our servers’ tips.”
Merkley aides told Bloomberg Law that he was simply trying to help Oregon restaurants understand their responsibilities under the rule when it was proposed
“In 2011 the Senator asked for clarifications so that employers would understand exactly how the tip pooling rule worked,” Merkley spokesman Ray Zaccaro said. “That rule, which the Senator supported, ensured that tips remained the property of employees. This proposed change doesn’t, which is why he’s opposing it.”
The senator’s letter doesn’t outright oppose the Obama rulemaking, but could still be used by industry groups to cast doubt on the merit of critics’ claims. Over his past nine years on the Senate, Merkley is a frequent supporter of organized labor and legislation to protect workers’ rights.
Service employer groups support the DOL’s rule reversal, saying it will give restaurant workers and management the freedom to design their own tipping arrangements and lift pay for back-of-house restaurant workers when the front-of-house workers are paid a full minimum wage in addition to tips. The National Restaurant Association argues the rule caused tremendous confusion about the state of play for businesses in states such as Oregon, where tipped workers must be paid the full minimum wage.
In 43 other states, businesses can take a tip credit to pay an hourly wage of as little as $2.13, provided that gratuities bring the worker’s average pay up to the federal minimum wage of $7.25 per hour.
Patricia Smith, who was DOL solicitor at the time of Merkley’s inquiry, recalls corresponding with the senator’s office in 2011. “I don’t remember any pushback from his office when we explained what our position was,” Smith told Bloomberg Law.
“I don’t think he was trying to weigh in substantively. He was talking about the confusion,” Smith, now a senior counsel at NELP, said. “He had been told that this was a situation—there was this 9th Circuit opinion that would’ve given them the right to have a broader tip pool, and now we have a regulation, so what was the state of the law?”
The Merkley letter refers to a 2010 decision in Cumbie v. Woody Woo, in which the appellate court ruled that the Fair Labor Standards Act does not restrict tip-pooling between front-of-house and back-of-house employees when the employer does not apply the tip credit. The DOL’s Wage and Hour Division wrote the 2011 rule directly in response to that decision, in an attempt to clarify the agency’s interpretation that tips belong to workers even when they are paid the minimum wage.
To contact the reporter on this story: Ben Penn in Washington at email@example.com
To contact the editor responsible for this story: Chris Opfer at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)