New bill bans restaurants from controlling tips earned by workers


A new spending bill that recently passed in Washington means restaurant managers will be prohibited from redistributing tips earned by servers. Passage of the $1.3 billion budget legislation late last week stipulates that what customers choose to leave for their wait staff will be theirs to keep.

The bill also includes a provision that allows supervisors and managers to distribute tips among other staff ‘ but only on the condition that the employer pay the full federal minimum wage.

Before the measure passed, the Trump Administration along with the National Restaurant Association framed the regulation as a much-needed move to restore wage equity among workers.

New bill lets servers keep their tips

“Under the proposed rule, workplaces would have the freedom to allow sharing of tips among more employees,” the Labor Department said in a news release in December. “The proposal would help decrease wage disparities between tipped and non-tipped workers ‘ an option that is currently restricted by a rule promulgated in 2011 that has been challenged in a number of courts.”

The bill’s passage was a cause of celebration for many in the restaurant industry.

“We beat them,” Saru Jayaraman, president of the nonprofit Restaurant Opportunities Center, said, according to CNN Money. “I think they realized how outrageous what they were proposing sounded to the public, and basically they backed down.”

While waiters and waitresses overwhelmingly are the ones who receive money from appreciative customers, the government pointed out that there are other behind-the-scenes employees at eateries ‘ cooks, dish washers, etc. — who don’t get to benefit from the generosity of people who enjoyed their dining experiences.

“These ”˜back of the house’ employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers,” the Labor Department said.

Critics vigorously condemned the measure, calling the new regulation a step backward for labor law.

Christine Owens, executive director of the National Employment Law Project, said in a statement: “If companies have trouble retaining non-tipped workers because their pay is so low, the solution is for the companies to raise the wages of those workers, not for the Labor Department to rig the rules so employers can essentially steal earnings from tipped workers to subsidize the businesses’ low-wage model.”


David Weil, who ran the Department of Labor’s wage-and-hour division under President Obama, said on social media that the new policy was  a”shameful” move. “As the person who ran the agency that enforces tipped wages I know wage theft is rampant.”

Heidi Shierholz, senior economist at the Economic Policy Institute, said on the think tank’s blog that that it was “unusual” that the government didn’t even share any projections from tip-pooling among employees. “Recent research suggests that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year, and workers in restaurants and bars are much more likely to suffer minimum wage violations than workers in other industries. With that much illegal wage theft currently taking place, it seems obvious that when employers can legally pocket the tips earned by their employees, many will do so.”

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