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Comments to the Department of Labor on the Rescission of Tip Regulations

The Department of Labor recently proposed rescission of tip regulations under the Fair Labor Standards Act. This move could allow employers to pool tips earned by employees and use them as they see fit. In the notice, the Department failed to identify the rule as an economically significant action, as defined under section 3(f)(1) of Executive Order 12,866. Such classification requires the responsible agency or department to conduct additional analysis, specifically a thorough cost-benefit analysis. Despite these requirements, the Department made little effort to quantify important effects of the proposed rescission, to consider a range of realistic assumptions, or even to explain why the rescission’s purported benefits justify the total possible costs. We submitted comments explaining the Department’s failures, including those above, as well as the evident lack of effort put forth by the agency to quantify possible effects on employment and worker earnings in the rescission proposal.