Can My Boss Keep My Tips? A New Trump Administration Rule Could Make Service Pay Way Worse
Workers who earn tips already face an uphill battle: relying on customers to supplement their hourly pay, which is often less than minimum wage. A new rule implemented by the Trump administration would make life even more challenging. Not only does the rule allow restaurants to pool tips, the Department of Labor rule would let employers keep servers' tips.
The rule was proposed by the Department of Labor on Dec. 5 and, at face value, seems like a fairly straightforward way to enable tip-sharing. Restaurants would be able to pool tips, so they could be split among servers, dish-washers, and cooks. But, as written, the rule doesn't require that employers distribute those pooled tips to workers at all. In fact, according to a report by the Economic Policy Institute, the rule would allow employers to legally pocket those tips.
According to the report, tip stealing (wherein employers pocket the tips of their workers) is already a problem, and it's currently illegal. A 2009 study found that 12 percent of workers in Chicago, Los Angeles, and New York have had their tips stolen by a supervisor. Legalizing the practice would likely exacerbate the problem in an industry in which many workers face financial struggles as it is.
The Economic Policy Institute estimates that, were the rule to go into effect as written, "employers would pocket $6.1 billion in tips earned by tipped workers each year" — nearly 17 percent of the estimated $36.4 billion in tips earned by workers each year.
Currently, the American federal government requires a cash wage of at least $2.13 per hour be paid to employees who receive at least $30 per month in tips. If wages and tips do not equal the federal minimum wage of $7.25 per hour during any week, employers must increase the worker's wages to compensate.
In the restaurant industry, there have been increasing calls to do away with the tipped wage altogether, as research has found it's unfair to women and people of color. According to a report by the Restaurant Opportunities Center United, 52 percent of all restaurant workers are women, but 66 percent of all tipped workers are women, meaning the lower minimum wage for tipped workers paves the way for "legalized gender inequity in the restaurant industry." Studies have also found that, in tip-based systems, nonwhite servers make less than their white peers for the same jobs.
Working for tips means that women are also often subject to sexual harassment in order to make a living. In other words, the workplace environment is already difficult enough for tipped employees — legalizing tip-stealing likely won't make things easier for workers.
While campaigning for president, Trump often promised that he would work for "the forgotten American worker" and would "bring jobs back and bring wages up." Already, the backlash to the proposed tipping rule has been swift, with critics saying the process by which the Department is aiming to pass the rule is "undemocratic and underhanded."
In a statement, the Department of Labor defended the rule, saying it would create more "freedom to allow sharing of tips among more employees" and "help decrease wage disparities between tipped and non-tipped workers."
But if employers were legally protected from giving workers fewer tips, those workers could find themselves at a considerable disadvantage. According to a 2014 report by the U.S. Department of Labor, servers are nearly three times as likely to experience poverty as other workers. A separate report, by the Economic Policy Institute, found that tipped workers rely on welfare programs at significantly higher rates than their non-tipped counterparts.