US Labor Department plans to scrap Obama-era ban on tip pooling

Washington, Dec 5 (IANS) The US Labor Department on Monday signalled that it would scrap a Barack Obama-era legislation that bans employers from pooling workers' tip.

In a Notice of Proposed Rulemaking, the Labor Department said workplaces "would have the freedom to allow sharing of tips among more employees", Xinhua news agency reported.

"The proposal would help decrease wage disparities between tipped and non-tipped workers -- an option that is currently restricted by a rule promulgated in 2011 that has been challenged in a number of courts," the Labor Department was quoted as saying.

The Labor Department noted that "back of the house" employees, such as cooks and dish washers, contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers.

Tip regulations are included in the Fair Labor Standards Act of 1938, according to the 2011 adjustment, employers were not allowed to pool tips among all employees.

Restaurant advocate groups have been fighting against the tip pooling ban, which they said adds to pay disparity between different restaurant employees, while some worker advocates worry there may not be enough oversight to ensure that employers redistribute the tip fairly.

The notice would be available for public comment for 30 days starting from Tuesday.

Tipping has been a tradition in the US service industry for about a century, where small amount of money is customarily, though not mandatorily, given to waiters, taxi drivers, among others.

There has been increasing discussion in the US media on whether the culture should be observed.

Some argue that in effect tipping does not necessarily improve the standard of service, and service establishments may take advantage of the culture to pay employees less.