A proposed Trump administration rule change would change the way millions of people working in the service industry are compensated by allowing employers at places like restaurants, hotels, and casinos to mandate tipped employees pool their tips with un-tipped staffers.
The Department of Labor announced on Monday the proposed change in federal guidelines on whether business owners can require tipped employees—like restaurant servers or casino dealers—to share their those earnings with their non-tipped coworkers, such as kitchen staff.
“The Department’s proposal only applies where employers pay a full minimum wage and do not take a tip credit and allows sharing tips through a tip pool with employees who do not traditionally receive direct tips—such as restaurant cooks and dish washers,” the department wrote in a release. “These ‘back of the house’ employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers.”
But while the department insists that allowing restaurants to institute forced tip-out policies will help level wage disparity between workers, labor advocates warn the proposed rule would simply diminish money that would—and should—otherwise go into tipped employees’ pockets. They argue that mandated tip-outs essentially mean that money given directly an employee for their service would be forfeited to their employers to disseminate as they see fit. And by using tip money to supplement what non-tipped workers earn, employers are legally able to keep wages low.
“Tips belong to the workers who have earned them, period,” National Employment Law Project Executive Director Christine Owens told the Wall Street Journal about the proposed rule change. “If companies have trouble retaining non-tipped workers because their pay is so bad, then the solution is for the companies to raise their wages, not to essentially steal what tipped workers take home at the end of the day.”
What’s worse, the proposed change might not even end up benefitting non-tipped workers. As the Economic Policy Institute’s Heidi Shierholz pointed out (emphasis hers):
Crucially, the rule doesn’t actually require that employers distribute pooled tips to workers. Under the administration’s proposed rule, as long as the tipped workers earn minimum wage, the employer can legally pocket those tips.
According to the Department of Labor, the proposed rule will officially be published in the on Federal Register on Dec. 5. After that, the public will have 30 days to submit comments on the proposal.