The Department of Labor (DOL) recently proposed a new rule that would allow employers to take their workers’ tips, so long as they pay them the minimum wage. If finalized, this rule could cost workers $5.8 billion annually. For workers who rely on tips to make up the difference on their $2.13/hr wage, this would be an economic disaster. Women would be affected most, as approximately 80% of the amount, $4.6 billion, would be stripped from female tipped workers, according to the Economic Policy Institute.
This rule would be a win for the National Restaurant Association (NRA), which is a powerful force in Washington that frequently works against the best interests of the industry’s low-wage employees. The NRA represents over 254,000 restaurants and 52,000 member companies, is one of the largest political organizations in the country. In 2016, the NRA spent nearly $4 million lobbying, and contributed $1,185,638 to various political campaigns and organizations.
In 2011, President Obama’s DOL stated that tips belonged to tipped workers, not restaurant operators in the Fair Labors Standard Act. The new DOL rule would basically overturn this and disadvantage workers. Under the guise of “tip-pooling”, which is defined as splitting tips evenly among waitresses, bartenders and the back of the restaurant workers, such as cooks and dishwashers, owners can pocket the money. Workers would no longer have a legal right to their tips, and would be forced to take their employer to court to demand their portion of the “shared” tips if their employer is untruthful or greedy, which presents an unimaginable financial burden for low-wage workers. This is especially discouraging given the national conversation on workplace equality and ending harassment.
Throughout the country, women work the majority of minimum wage jobs. The restaurant industry is no exception, and workplace harassment is prevalent. Restaurant Opportunities Center United (ROCU) found that 90% of women who work for tips in restaurants report experiencing unwanted sexual comments or behaviors in the workplace. Moreover, ROCU reports that women of color have the particular challenge of disproportionate segregation in the quick serve, which is the lowest paying segment. It would be a financial strain on working women and their families if the DOL were to add tip-stealing to their struggles.
At the end of a shift, there is no way to enforce that employers actually redistribute tips. During a time when there are efforts across the country to legislate living wages, this is not just another example of tipped workers being left behind, but of them being negatively targeted. The proposed DOL rule would be another win for corporations, right on the heels of the major windfall that was the GOP tax plan.