News & Events

News & Events

6.12.2013

DOL Tip-Pooling Loss May Spur More Agency Rule Challenges

Bookmark and Share

Lane Powell Shareholder Paul Ostroff was quoted in a June 11 Law360 article titled “DOL Tip-Pooling Loss May Spur More Agency Rule Challenges.”  The article discussed the recent ruling by an Oregon federal court, which ruled that the U.S. Department of Labor (“DOL”) had exceeded its authority by issuing regulations on worker tip pooling at restaurants.  The main question in the ruling was whether the lack of language addressing an employer’s use of tips when no tip credit is taken is an “implicit gap” that’s supposed to be filled through regulation or an area where Congress wanted free choice to reign, the court said.  This is the latest in a growing body of recent rulings that encourage legal challenges seeking to curb federal agencies’ power.  The ruling is part of an ongoing battle between courts and federal agencies like the DOL over just how much authority those agencies have, and where the balance of power rests between the executive and judicial arms of government.

Friday’s decision is important for restaurants and other employers in the western U.S., where state laws prohibit employers from using a tip credit against the minimum wage.  Companies that do business in those states could expect increased labor costs as a result of the regulations, which ban employers from contracting with tipped workers to include “back of the house” employees, such as kitchen employees, in their tip pool, said Paul Ostroff, a Portland, Ore.-based shareholder with Lane Powell PC. …

… The DOL has pushed the envelope when it comes to questions of congressional intent, Ostroff said, and both the DOL and National Labor Relations Board have stretched their statutory mandate in ways that have been unprecedented.