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By Ben Penn
Democratic Senators are keeping the Labor Department’s tip pool controversy alive with concerns that it set a bad precedent for the regulatory process in the Trump administration.
Sens. Heidi Heitkamp (N.D.) and Maggie Hassan (N.H.) used much of their time at an oversight hearing April 12 to press Neomi Rao, administrator of the Office of Information and Regulatory Affairs, on how she allowed the DOL to scrub from the tip pool proposal an analysis showing the rule could let managers keep $640 million per year in workers’ gratuities.
That issue is largely moot now that the recently passed omnibus contains a rider to ban tip skimming. That move was the result of a compromise the administration reached with Senate Democrats to quell growing controversy over the concealed data. The hidden analysis was first reported by Bloomberg Law in February.
Democrats leveraged the Homeland Security and Governmental Affairs Committee’s regulatory oversight role to press Rao on a follow-up report revealing that Labor Secretary Alexander Acosta went to OMB Director Mick Mulvaney to overrule Rao. OIRA had sought to block the regulation from release until the data was reinstated.
“We understand the Department of Labor didn’t want to come today,” Heitkamp, the panel’s ranking member, said to Rao. “So you’re stuck sitting there, defending what the Department of Labor did. I get it. But this is not any way to run the railroad, and we need to lay down a marker right now that we are going to be watching for this kind of backhanded, ham-handed irresponsible kind of rulemaking process.”
Heitkamp is a moderate Democrat in the midst of a tight re-election campaign in a red state, North Dakota. She has been measured in her criticism of President Donald Trump’s administration and hasn’t always supported the Obama administration’s active regulatory agenda.
Hassan asked Rao specifically about the revelation that she had unsuccessfully attempted to stop the DOL from releasing the rule without the estimates. Rao didn’t address the behind-the-scenes discussions.
“I cannot speak to the internal deliberative process surrounding the rule, but at OIRA, we are very committed to having quantitative analysis whenever possible for a rule,” she replied.
The New Hampshire Democrat wasn’t satisfied.
“In this particular instance I am very concerned that what seems to many of us, political considerations overtook appropriate quantitative analysis in a really important regulation to millions of working people in our country,” Hassan said.
While the DOL didn’t send a representative to the hearing, the labor secretary defended his agency’s transparency later that morning at another Senate hearing.
Labor Secretary Alexander Acosta concluded his remarks before an appropriations panel with an attempt to demonstrate why he didn’t include the completed analysis in the tip-pooling proposal. The secretary described the underlying data the department had on hand, and the numerous missing data points that he said would have been necessary to put out a responsible figure in the proposed rule.
“When we write rules, I think it’s important that the analysis should be relevant, based on realistic assumptions, and helpful to the public,” Acosta said. “It should not be a check-the-box exercise.”
The rule in question would reverse a 2011 regulation which had stated tips are the property of employees who earn them. The new rule would let restaurants paying tipped workers at least $7.25 per hour control their tips and distribute some of them to the back-of-house employees, such as cooks and dishwashers.
Acosta and Rao both brought up the fact that the 2011 version of the rule also didn’t include a quantitative analysis, thereby setting a precedent that the new rule adhered to. But Obama administration officials have said their rule was intended to codify longstanding enforcement policy. The earlier rule was not tagged by OIRA as economically significant, but the new version was, meaning it would typically go through a more rigorous review and analysis process.
That the tip-pooling controversy concerned a deregulatory action also proved irksome for Heitkamp. The Trump administration has made a sweeping effort to cut back on regulations throughout the executive branch.
“I tend to see, you know, if you’re going to promulgate a rule, we want this robust process, but if you’re going to deregulate, just throw up your hands and not go through the process,” she said.
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