Tucked into Congress’ 2,200-plus-page omnibus spending bill are a few paragraphs that would prohibit employers from sharing server tips with others in a restaurant – including the employers themselves. Worker advocates label the provision a bipartisan rebuke to a proposed Department of Labor rule last year that could have legalized a practice now considered wage theft under the law.
If enacted as part of the $1.3 trillion spending deal reached by congressional negotiators, the provision could throw cold water on a National Restaurant Association lawsuit that challenges a 2011 federal rule prohibiting employers from establishing pools to share servers’ tips with traditionally non-tipped employees, such as back-of-the-house cooks and dishwashers who often earn less than servers in upscale dining rooms. The Obama Administration had issued the regulation to clarify the Fair Labor Standards Act, which expressly prohibited tip sharing between tipped and non-tipped workers when employers claimed a federal tip credit but was silent on whether employers could start such a pool if they didn’t take the credit. A tip credit is the portion of customer tips that employers are allowed to use to cover a worker’s minimum wage.
The 2011 regulation stated that tips are the property of the employee, regardless of whether an employer claims a tip credit. As such, the tips could be shared only with “employees who customarily and regularly receive tips,” a group that would exclude not just cooks and dishwashers, but also managers and owners.
The restaurant association argued that Obama’s Department of Labor had overreached when it issued the final regulation more than a year after the U.S. Court of Appeals for the Ninth Circuit ruled specifically that employers could split server tips with traditionally non-tipped employees if the businesses did not claim a tip credit.
Last year, the Trump Department of Labor seemed to side with the restaurant association and Ninth Circuit’s decision (even though the very same court would later reverse its own decision).
The agency proposed a new rule that would allow, in certain cases, tip pooling with back-and-house employees to try to balance out pay inequalities.
Worker advocates and labor lawyers, however, argued that the rule would give owners control of tips, which they could distribute as they see fit.
Molly Elkin, an attorney who represents workers in cases brought under the Fair Labor Standards Act, told The Washington Post in December that it was a fantasy to think employers would handle the tips equitably.
“The proposed rule does nothing more than authorize wage theft on the part of the employer,” noted Elkin, a partner at the Washington law firm Woodley & McGillivary. “The employer can simply pocket the tips, and Trump’s [Labor Department] will not care.”
In recent years, high-profile chefs and restaurateurs have been sued for alleged wage theft, including Mario Batali, Daniel Boulud, Jessica Biel and the owner of the four-star Sushi Nakazawa in New York.
What’s more, in an investigation of more than 9,000 full-service restaurants from 2010 to 2012, the labor department’s Wage and Hour Division found that nearly 84 percent of the establishments had some type of violation, including tip violations.
The Trump labor department’s proposal motivated workers and their advocates to take action across the country. More than 215,000 people left comments on the proposed amendment when it was published in the Federal Register in December; most of them were against the proposed rule.
Workers and activists also protested at labor department buildings in 20 cities, according to Restaurant Opportunities Centers United, or ROC United, an advocacy group for restaurant employees. At the Department of Labor’s headquarters in Washington, protesters hung a banner on the building that read: “Trump, Don’t Steal Our Tips!”
Lawmakers are now working to pass the legislation in the House and Senate before midnight Friday, the deadline to avoid a government shutdown.
“Today represents a historic victory for restaurant workers,” said ROC United president Saru Jayaraman in a statement. “The National Restaurant Association wanted to steal workers’ tips, but the workers said no – and they won. The fact that hundreds of thousands of workers stood up and said no to employers taking their tips, and that congressional leadership listened and acted, is a testament to the power of workers standing up together.”
The restaurant association could not be immediately reached for comment.
Send questions/comments to the editors.
