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Trump administration proposes rolling back Obama-era tip-pooling rule

The public has 30 days to comment on a plan to kill a rule that allows restaurant employees to keep their tips instead of sharing them with non-tipped workers.
Image: A waiter's tip on a check
A tip left on a check.Francis Dean / Corbis via Getty Images

The Labor Department on Monday opened 30 days of public comment on its proposal to eliminate an Obama administration rule that allowed restaurant employees to keep their tips instead of being forced to share them with non-tipped workers.

The Labor Department said in a statement that the rule had contributed to pay disparities between servers and other staff, like cooks and dishwashers. The Trump administration stopped enforcing the Obama rule nationwide when it first announced the proposal in July.

The department said formal publication of its proposal kicks off the 30-day public comment period.

A waitress serves customers in New York in May 2013.Victor J. Blue / Bloomberg via Getty Images file

Employers who pay the tipped minimum wage, which is lower than the standard minimum wage of $7.25 per hour, can't pool tips and share them with non-tipped workers under current law. The Obama administration rule, which was adopted in 2011, also banned the practice for businesses that pay the higher minimum wage.

The ban on tip-pooling is the latest labor regulation that opponents say are designed to target workers.

The Labor Department in July also took the first steps toward repealing an Obama administration rule that would have extended mandatory overtime pay to more than 4 million workers. And in August, the administration blocked a rule that would have required companies to report employee wage data broken down by sex and race.

Tipped workers are among the most vulnerable employees in the country, said Saru Jayaraman, president of the union-backed Restaurant Opportunities Centers United. Repealing the rule would leave them even worse off, she said.

"By allowing employers to take control of their employees' tips, this regulation would push a majority-women workforce ... further into financial instability, poverty, and vulnerability to harassment and assault," she said in a statement.

A spokesman for the Labor Department didn't immediately respond to a request for comment.

The rule has been criticized by industry groups who say tip pooling is necessary to address the compensation gap between servers, who have been earning more as food prices increase, and untipped colleagues in the kitchen.

But the Trump administration could face legal challenges from workers' rights groups.

Christine Owens, executive director of the National Employment Law Project, said in a statement that the proposal didn't indicate how much money tipped workers could lose if the rule were eliminated, which is required by federal law.

The Supreme Court is considering whether to review a challenge to the tip-pooling ban by the National Restaurant Association and other groups.