Many food service workers and labor leaders have expressed concern about the fine print, which could make it legal for employers to pocket workers’ tips outright. Because so many food service jobs are female-dominated, the change would cost women most of all.
The proposal rescinds portions of Obama-era DOL regulations that make it illegal for employers to redistribute workers’ tips. The rule would mean that restaurant owners, and other employers, could take workers’ tips as long as they pay those workers the minimum wage. This practice has been dubbed “tip stealing,” for obvious reasons.
The rule Could cost workers billions
Employers could potentially experience quite a financial windfall if this rule goes through. Workers, on the other hand, could lose billions every year.
The Economic Policy Institute (EPI) estimates that if this change is finalized, workers would lose $5.8 billion per year. Since women dominate food-service jobs, they stand to lose the vast majority of those earnings — $4.6 billion each year, per the EPI.
The rule has been touted as a way to benefit “back-of-the-house” workers who don’t get tips. But, the EPI doesn’t believe that would be the case. They predict that take-home pay for non-tipped staff would remain unchanged.
In a press release the, EPI said:
DOL has masked the fact that this rule would be a windfall to restaurant owners and other employers—out of the pockets of tipped workers—by making it sound as if this rule is about tip pooling. Of course, once employers have full control of tips, one of the things they could do with those tips is distribute them to “back of the house” workers like dishwashers and cooks. But the proposed rule does not require employers to distribute the tips, so employers would be no more likely to share tips with back-of-the-house workers than they would be to make any other choice about what to do with a business windfall, including using the money to make capital improvements to their establishments, to increase executive pay, or to line their own pockets.
The change isn’t popular
A poll of more than 800 registered voters found that 82 percent of respondents were opposed to the idea. This response held across geographic and party lines. Sixty-one percent of those who were surveyed even said they were strongly opposed to the change. Also, 57 percent said they would tip workers less, and tip less often, if the rule goes through.
“Voters understand that this is a blatant attempt to transfer billions of dollars from consumers and workers to restaurant chain owners,” said Christine Owens, executive director at the National Employment Law Project. “Worse yet, this poll provides further evidence that consumers will tip less and less often if they think their tips will go to the CEO instead of their server. The Labor Department should listen to voters, consumers, and restaurant workers and scrap this outrageous proposal.”
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