DOL Halts Enforcement of Tip-Pool Rule Nationwide

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By Ben Penn

Labor Department investigators are now forbidden from enforcing a 2011 rule that restricts employers’ use of tip pools ahead of an upcoming proposal to void the regulation, a DOL spokesman told Bloomberg BNA.

The nationwide nonenforcement policy took effect July 20, the same day the DOL’s Wage and Hour Division announced plans to rescind the regulation in a proposal it estimated will be released next month.

Previously, the WHD didn’t enforce the rule in the nine Western states or at National Restaurant Association members elsewhere following a 2013 decision by the U.S. Circuit Court for the Ninth Circuit.

The regulation bars restaurants and other service industry employers from requiring front-of-house employees, such as servers, to share tips with back-of-house workers, such as cooks and dishwashers, including when the tipped employees are paid the full minimum wage.

The WHD’s proposed rule to rescind the regulation, planned for August, would come just prior to the administration’s Sept. 8 deadline to respond to the restaurant industry’s U.S. Supreme Court challenge seeking to declare the rule unlawful. The rescission proposal may allow the Justice Department solicitor general to state in his brief that the high court shouldn’t take the case because DOL is in the process of eliminating the rule.

The potential for justices to use this petition as a vehicle to narrow the legal doctrine that all agencies rely on to wield rulemaking authority—known as the Chevron deference—also is a factor in the solicitor general’s response, attorneys recently told Bloomberg BNA.

Last month, the Tenth Circuit also declared the tip-pool rule invalid, extending the nonenforcement stance to six more states, including Kansas, Colorado, and Arizona. But it wasn’t until July 20 that the WHD made nonenforcement a nationwide policy, the DOL spokesman said.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

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