March 22, 2018

Warren Requests Hearing, Demands Answers from Labor Secretary and OMB Director on Buried Analysis of Tipping Rule

Urges HELP Chairman Lamar Alexander to Identify Reasons for Botched Rulemaking

Text of letter to Labor Secretary Acosta (PDF)

Text of letter to OMB Director Mulvaney (PDF)

Text of letter to HELP Chairman Alexander (PDF)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today sent letters to Secretary of Labor Alexander Acosta and Office of Management and Budget (OMB) Director Mick Mulvaney reportedly hid an analysis of DOL's tipping rule showing that it would result in billions of dollars being stolen from workers by their employers. Senator Warren also requested that Senator Lamar Alexander, Chairman of the Health, Education, Labor, and Pensions (HELP) Committee, conduct an oversight hearing on what appears to be egregious mishandling and political interference by Secretary Acosta and Director Mulvaney.

Although Congress will halt DOL's efforts to allow employers to take their workers' tips through its Omnibus legislation, Senator Warren wrote that the public has a strong interest in fair and honest rulemaking at the Department of Labor and throughout the federal government.

In December, DOL proposed a regulation that would allow employers to legally confiscate the tips that their employees earn. An internal DOL analysis of the proposed rule indicated that this could cost workers billions of dollars in take-home pay per year. According to reports, before Secretary Acosta released the proposal, he removed the analysis and "convinced OMB Director Mick Mulvaney to overrule the White House regulatory affairs chief and release a controversial tip-sharing rule without data showing it could allow businesses to skim $640 million in gratuities."

"You owe the American people an explanation for how and why OMB allowed the DOL to release a proposed rule without an analysis of its effects on workers, despite the fact that not only one existed but that Administrator Rao and her staff reportedly rejected DOL's initial attempt to issue the proposal without such an analysis," wrote Senator Warren to OMB Director Mulvaney. "The suggestion that you and Secretary Acosta both overruled your own staffs in order to reach a politically pre-ordained outcome without regard for the welfare of working men and women is deeply damaging to the trust that the American people place in the federal government to use its regulatory power on their behalf, not for lobbyists and narrow corporate interests."

In her letter to Chairman Alexander, Senator Warren requested an oversight hearing as soon as possible. "This matter falls squarely within the Committee's jurisdiction, and given its impact on millions of workers, and reports of what appears to be egregious mishandling and political interference by Secretary Acosta and Director Mulvaney, the Committee should hold hearings to determine the facts," wrote Senator Warren.

Senator Warren asked that the hearings include both Secretary Acosta and Director Mulvaney, and that the Committee obtain all relevant documents and communications by DOL, OMB, and White House officials to determine how exactly DOL and OMB released a tip rule proposal that did not include an analysis of its effects on tipped workers, why the analysis was taken out of the rulemaking, and how DOL and OMB can restore the public's trust in its rulemaking processes.

Senator Warren reiterated her call for Secretary Acosta to provide detailed answers to her questions about the botched rulemaking.

"You have damaged the public trust in your ability to fairly and honestly perform your duties as Secretary of Labor and you have severely compromised the rulemaking process," wrote Senator Warren to Labor Secretary Acosta.

In February, Senator Warren sent a letter to Secretary Acosta expressing her concern about reports that DOL leadership hid the damaging analysis from the American public. She also questioned OMB's Office of Information and Regulatory Affairs (OIRA) Administrator Neomi Rao about whether OMB officials played a role in hiding the unfavorable internal analysis.