Food and Beverage

Restaurants Have No Right to Take Employees' Tips - The Guardian

Excerpt from The Guardian

Trump’s labor department is planning to make tips employers’ property – a huge transfer of money from workers to owners

When most people leave a tip at a restaurant, they assume it will go to the person who served them their meal. For decades, that assumption was correct. But the Trump administration wants to change that.

Going against longstanding practice codified in a 2011 rule, the labor department, led by Trump appointee Alexander Acosta, has proposed a radical change that will allow restaurant owners to pocket the tips customers leave for the wait staff. It’s a huge giveaway to corporate special interests – this time the National Restaurant Association – at the expense of millions of workers. Compounding it all, the Acosta labor department did so by defying basic procedures of the regulatory process designed to ensure transparency.

First, a few facts about tips and the impact of this change on hard-working people. The Fair Labor Standards Act allows restaurants to pay their wait staff $2.13 an hour, so long as their tips get them to the minimum wage of $7.25. States may set higher minimum wages, but in all states, tips beyond the minimum wage go to the server. Under the guise of relaxing rules about tip pooling, the proposed rule revokes the principle that tips are the property of the server.

The Trump administration is casting the rule as something that will allow restaurant owners to be more egalitarian. Under current rules, employers can’t require servers to share tips with “back-of-the-house” workers, who are required to be paid the full minimum wage. The department argues that by making tips the property of employers rather than servers, employers might choose to distribute part of those tips to workers like dishwashers and cooks. But that doesn’t stand the test of simple economics: current tip rules do not limit what restaurants pay to back-of-the-house workers now. So why would they raise their pay if given the right to keep tips?

In essence, the administration is giving a windfall to restaurant owners – out of the pockets of tipped workers – and trying to hide that fact by talking about it as if they’re helping back-of-the-house workers. But Americans aren’t buying it: recent polling finds voters overwhelmingly oppose the proposal.

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