Lawmakers Negotiating Funding Bill With Ban on Tip Skimming

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By Tyrone Richardson, Chris Opfer, and Ben Penn

Congressional lawmakers are negotiating a deal to fund the government that would include a provision to squelch controversy surrounding a proposed Labor Department rule about sharing of tips, sources tell Bloomberg Law.

Lawmakers are floating language in the $1.2 trillion omnibus bill that would allow employers to impose tip pooling arrangements at restaurants and other workplaces but ban management from participating in the pools.

The idea has raised concerns from at least one Democrat. Education and the Workforce ranking member Rep. Bobby Scott (Va.) fears the language could allow employers to reduce wages for workers, according to sources familiar with the situation who spoke on the condition of anonymity. That’s because businesses could drop pay for back-of-house workers who don’t normally receive gratuities and force front-of-the-house employees to make up the difference by sharing their tips.

Negotiations were continuing on the issue as of early evening March 20. Congressional leaders are expected to introduce the omnibus spending measure as soon as in the coming hours. The legislation is a package of appropriations bills funding the government until the end of this fiscal year.

The provision would mark the latest congressional action stemming from Democrats’ and employee advocates’ criticism of the DOL since Bloomberg Law reported that the department scrapped an economic analysis showing that a proposed tip sharing regulation could allow employers to skim billions of dollars in tips.

House labor appropriations committee Democrats days ago introduced a bill to address the issue by banning forced tip-sharing arrangements and management participation in voluntary pools. That measure, which has 13 Democratic co-sponsors, has not received a nod from Republicans.

The proposed DOL rule would generally allow employers to require servers and others who earn tips to share the gratuity with those who do not, such as kitchen staff. It would reverse an Obama-era regulation that asserted tips are the property of employees who earn them and can’t be distributed to the back-of-the-house workers when tipped workers are paid the full federal minimum wage of $7.25 per hour.

Labor Secretary Alexander Acosta and House labor appropriations subcommittee chairman Rep. Tom Cole (R-Okla.) have said they would support a legislative solution.

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