Saturday, 23 March, 2019

Attorney General Stein: Let Workers Keep Tips They Earn

Steve Debenport  getty Steve Debenport getty
Patty Aguilar | 07 February, 2018, 01:24

The language in the proposal suggests that employers could allocate tips to make capital improvements or lower menu prices, which the Department of Labor claims could have "potential benefits to employees and the economy overall". The latter practice is known as a "tip credit". Until now federal law has held that tips are the property of those who receive them.

The new rules would not be restricted to the restaurant industry. Under the proposed rule change, business owners would be allowed to require tip pooling and use pooled tips for any goal, provided employees have been paid the federal minimum wage. It also means owners could take a share for themselves. However, workers in many other states do not have the same protections.

If the regulation is changed, tipped workers paid less than federal minimum wage would still keep all their tips.

"Whether an employee works in the front of the house or the back of the house, an employee's efforts affect a customer's experience", says a comment in favor of the change that the National Federation of Independent Business submitted to Labor Secretary R. Alexander Acosta.

Advocates of the proposal say it would give restaurants greater flexibility in their worker compensation, and allow employers and employees to establish their own tip pooling arrangements without interference from the federal government. The proposal would permit tip pooling arrangements that involve restaurant servers and other workers who make tips and back-of-the-house workers who don't.

"We estimate that almost $6 billion will be taken from workers and pocketed by employers", Shierholz says.

California Attorney General Xavier Becerra, co-leading a coalition of 17 Attorneys General, on Monday filed his strong opposition to the Trump Administration's proposal to rescind a rule that allows all employees to keep the tips they have earned.

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"The Department of Labor should be focused on improving tipped workers' economic security", wrote Institute for Policy Studies Director John Cavanagh in the organization's public comment letter.

The proposed rule has generated a surprising amount of attention, attracting more than 180,000 comments from the public by Friday.

"When you put out a proposed rule, you have to put out the analysis you have that shows the impact of it", said Senator Patty Murray of Washington, the top Democrat on the committee that has oversight over the department.

When it released the proposal, the department said that the omission was the result of "a lack of adequate data and the speculative nature of determining how employers, employees, and customers would all react".

"People have a lot of feelings about this", says Heidi Shierholz, who served as chief economist for the Labor Department under former President Obama.

A Labor Department spokesman said in a statement that officials do plan to include a cost-benefit analysis with their final decision on the tip rule.

Bloomberg Law reported last week that senior agency officials scrubbed a report showing workers could lose billions in gratuities if the rule is adopted. "We urge this Administration to scrap this rule and go back to the drawing board".

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