Labor department to rescind tip-pooling restrictionsLabor department to rescind tip-pooling restrictions

The federal government is planning to rescind a controversial regulation preventing restaurants from pooling tips, a major victory for industry advocates who had fought the rule for years.

This week, the U.S. Department of Labor published a notice that it intends to rescind the tip-pooling rule, which the Obama administration put in place in 2011.

“By all means, this is a huge victory for us,” said Angelo Amador, executive director of the National Restaurant Association’s Restaurant Law Center. “This is a great development.”

Under the Fair Labor Standards Act, restaurants are able to pay wait staff a lower wage as long as their tips make up the difference, which is known as a “tip credit.”

Historically, restaurants that don’t take the credit...