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Today’s Proposed Spending Bill Protects Tipped Employees

In 2011, the Department of Labor put forth a regulation clarifying that tips are to be considered the property of the employee who earns them, and prohibiting employers from requiring tipped employees to share their tips with non-tipped employees. Courts remained split on the issue, however, with the Ninth Circuit upholding the Obama era regulation prohibiting tip sharing even if the tipped employee was paid minimum wage, and other circuits rejecting it, concluding tip sharing could be implemented by the employer if the tipped employee was paid the full minimum wage rather than the reduced tip credit wage.

Last year, the Department of Labor, in a move that sought to undo the 2011 regulation, put forth a proposed rule that would have permitted employers to require their tipped employees to pool their tips and to share them with non-tipped, back-of-the house employees like cooks and dishwashers. While some lauded the proposal—which would not have applied to employers who take the tip credit—as a great equalizer, ensuring all workers who contributed to a customer’s experience at a restaurant (not just those who directly interfaced with customers) received equal reward, others rightly pointed out the proposal contained no measures to ensure employers didn’t simply take the pooled tips for themselves. With the proliferation of wage theft claims against employers in the service industry, this was a real concern for labor rights organizations.

Hidden in the current proposed spending bill is a tiny provision prohibiting employers from requiring their tipped wait staff to share their tips with non-tipped employees. Assuming President Trump signs the bill, it will represent a small victory for workers in an industry dominated by women who rely on tips to support their families. The reality remains, however, that a stark income disparity exists between servers and back-of-the house employees (who may be undocumented and thus particularly vulnerable to wage theft). Perhaps the best solution simply would have been to modify the Trump administration’s proposed rule to expressly prohibit employers from pocketing pooled tips.

Article Written By: Ariel Henderson

Employment Law

Published 3/23/2018