Restaurant Worker Group Amps Up Legal Team to Fight Tip Rule

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By Jon Steingart

Restaurant workers are getting ready for a legal fight.

“We are building a full legal department within ROC, many more attorneys than we’ve had before,” Saru Jayaraman, president of worker advocacy group Restaurant Opportunities Center United, told Bloomberg Law. “In the past we’ve worked with attorneys on the outside and now we have an in-house general counsel, two full-time attorneys, several paralegals/organizer types that are organizing workers to file charges, and we’re going to hire more attorneys.”

ROC is one of the organizations leading the fight against a Labor Department move that would rescind Obama-era rules on tip income. It held demonstrations at the DOL headquarters in Washington and other locations Feb. 5, delivering what it said were 346,132 comments in opposition to the proposal.

The rule that would be rolled back says tips are the property of the employee. The Labor Department’s December proposal indicates businesses may allocate customer tips to make capital improvements to their establishments, lower menu prices, provide worker benefits such as paid time off, increase work hours, or hire additional workers. Bloomberg Law reported Feb. 1 that the Labor Department withheld data that showed its proposal could allow restaurant owners to pocket billions of dollars in tips.

That same day, ROC filed a comment that expressed concern over the Bloomberg Law report. ROC also expressed concern that the DOL said in the proposals that it couldn’t quantify how a rollback might affect customer behavior and that it lacked data for analyzing how tips might be reallocated.

“Such actions fly in the face of a number of authorities that govern federal agency rulemaking, including Executive Order 12866, Executive Order 13563, and guidance from the White House Office of Management and Budget, which require that agencies are to quantify costs and benefits of their proposed regulations wherever possible,” Jayaraman wrote for ROC. The actions are counter to the transparency needed to ensure the regulatory process is “fair, reasonable and consistent with the law,” she said.

Separate from ROC, attorneys general in 16 states and the District of Columbia filed comments Feb. 5 expressing concern that failing to disclose the analysis deprived the public of a meaningful opportunity to comment in violation of the Administrative Procedure Act. If an agency finalizes a rule in violation of the APA, that may be grounds for a court to block it.

A Labor Department spokesperson told Bloomberg Law Feb. 8 that the agency “intends to publish an informed cost benefit analysis as part of any final rule.”

Representatives for the National Restaurant Association, a trade group engaged in a court challenge to the Obama-era tip rule, and its affiliated legal shop, the Restaurant Law Center, didn’t immediately respond to a request for comment Feb. 9 on ROC’s plan to build up its legal department.

(Story was updated to correctly identify Jayaraman’s title.)

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com

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