Source: Law360
By Joyce Hanson
January 11, 2018
More than half of earnings for waiters and bartenders come from tips, says a new report released Thursday as the U.S. Department of Labor considers reversing an Obama-era rule that prevents employers from redistributing servers’ tips to back-of-house employees.
The new report from the National Employment Law Project and the Restaurant Opportunities Center used U.S. Census data to calculate that median monthly tip earnings for bartenders and wait staff totaled $867, representing 59 percent of wait staff earnings and 54 percent of bartender earnings.
These figures show that restaurant servers and bartenders could lose control of a large portion of their earnings if a proposed rule change by President Donald Trump’s Labor Department goes into effect, the report concluded.
“The Department of Labor recently proposed rolling back an Obama-era rule that protects workers in tipped industries, including restaurant servers and bartenders, from having their tips taken away by their employers,” the report said. “Under the proposal, federal law would allow restaurant owners who pay their wait staff and bartenders as little as $7.25 per hour to confiscate and pocket all of the tips left by customers, without having to disclose to patrons what happens to tips.”
In addition, the report found that workers in these restaurant jobs earn little on an hourly and annual basis – even when accounting for tips.
It cited a recent study of the Census Bureau’s current population survey by the Economic Policy Institute and the University of California-Berkeley, which finds that median hourly earnings for waiters and bartenders are just $10.11 per hour including tips, only $2.86 above the current federal wage floor.
The DOL suggests that restaurant owners might use tips to give their workers more hours, at a lower effective wage, or to subsidize wages for back-of-the-house employees, but it acknowledges that employers can use the tips in any manner they see fit, such as for capital improvements, the report said.
“A standard economic analysis found that $5.8 billion will be transferred from workers directly to employers as a result of this rule,” according to the report.
After lawmakers and workers’ advocates called on the Department of Labor to give stakeholders more time to weigh in, the agency extended the original deadline for comments on its proposal to let hospitality employers redistribute workers’ tips if they pay at least minimum wage.
A page on the DOL’s website discussing the Dec. 4 proposal to roll back the Obama administration rule forbidding tip pools involving non-tipped workers indicated the agency would extend the Jan. 4 deadline by 30 days to Feb. 5.
The DOL had received more than 109,774 comments on the proposal as of Thursday, according to the rule’s page on regulations.gov.
A representative for the National Restaurant Association – the world’s largest food-service trade association in the world, with more than 500,000 restaurant businesses as members – did not immediately respond Thursday to a request for comment.
The Dec. 4 DOL proposal seeks to rescind a 2011 rule amending the agency’s interpretation of the Fair Labor Standards Act to block employers from taking front-of-house workers’ tips even if they earn at least minimum wage. Employers typically use tip pools to pay more to non-tipped workers, such as cooks and dishwashers, though rescinding the rule would also let businesses pocket the money.
The DOL previously blocked employers from sharing tips with non-tipped workers only if they took the tip credit, an FLSA provision allowing businesses to pay service workers at below minimum wage if tips make up the difference. The agency does not, however, stop restaurants from pooling tips among tipped workers.