If you work for tips, you know how important it is to go home at the end of your shift with your cash in your pocket, knowing you’ve gotten paid for the day. But what if your boss got to keep the wages instead, and pay you later, maybe? That’s the deal the Trump administration is proposing for restaurant workers nationwide. The Labor Department thinks workers should trust bosses to hold on to workers’ tips and take their own cut as they please.
The Department of Labor has proposed a rule change that would tweak federal labor standards for tipped workers, such as restaurant servers and bartenders, to give employers major discretion over how to spend the wages workers earn in cash tips. Under current rules, workers generally keep the tips paid directly by customers; so what’s left on the table typically goes into the server’s pocket, or a guest leaves a customary tip for their usual bartender—period. But now, the administration wants to let the boss have first dibs.
Under the proposed revision to federal wage regulations, employers would gain primary authority to control and redistribute tipped earnings, the same way they would, presumably, with any other regular business revenue. But labor advocates say this would open another pathway to steal tips that the worker earned through their individual service, based on the assumption that staff will ultimately be left with at least the minimum wage of $7.25 per hour.
According to Raj Nayak, director of research at National Employment Law Project (NELP), the proposed reform simply means “employers will have the opportunity under federal law to say, as long as we pay you [the federal minimum wage], we can then take all of your tips, and we can redistribute them how we’d like or we can pocket them.”
The Labor Department has justified the proposal as a correction to policies around the “tip credit”–the second wage tier designated for tipped workers. Federal law enables servers and other “front of the house” staff to be paid on the basis of a “subminimum wage” of just $2.13 an hour, with the assumption they earn at least the full legal base wage when tips are factored in.
The administration—which cites recent court rulings that favor giving employers greater authority to control tipped earnings—argues that the proposed reform would give bosses “greater flexibility in determining the pay policies for tipped and non-tipped workers.” Supposedly, magnanimous employers would use the confiscated cash to “share” more tips with more workers, helping “to reduce wage disparities…and to incentivize all employees to improve that experience regardless of their position.” That may seem like an ideal all-boats-rise scenario. But labor advocates see no reason to entrust managers to manipulate workers’ tips. The reality is that, even under current rules, labor abuses and wage theft are endemic to the restaurant industry; according to the Economic Policy Institute, about one in seven food- and drink-service workers report being paid less than minimum wage—making up roughly one-quarter of all wage-theft cases nationwide.