Please ensure Javascript is enabled for purposes of website accessibility
Good News for Waiters & Dishwashers Is Found in Federal Budget
The-Conversation
By The Conversation
Published 7 years ago on
March 27, 2018

Share

While federal workers were breathing a sigh of relief that Congress managed to avoid a government shutdown, another group of workers also had reason to cheer. That’s because hidden deep in the $1.3 trillion budget deal that President Donald Trump signed on March 23 was a measure preventing his administration from changing the law to allow employers to take workers’ tips.


Opinion
Nicolle Hallett
As an expert in workers’ rights, I believe the measure also has the potential to reduce an inequality that has long existed in the restaurant industry.

The Law on Tips

The federal minimum wage is $7.25 an hour. Tipped employees, however, can earn as little as $2.13 if they make up the difference between that and the minimum wage – or more – in tips.
This came to be known as a “tip credit” and allows employers to pay subminimum wages, as long as they let the worker keep all of his or her tips.
In 2011, the Obama administration promulgated regulations stating that employees must be allowed to keep all their tips, regardless of whether they are paid the tipped or full minimum wage. The only exception was in cases of a tip pool that distributed tips among employees who “customarily and regularly receive tips.”
Despite this rule, tip stealing is widespread in the restaurant industry. A 2009 survey of low-wage workers in New York, Chicago and Los Angeles by the National Employment Law Project, a national policy organization, found that 12 percent of survey participants who received tips had their tips stolen by their employer in violation of current law.

Changing the Rules

The Trump administration was poised to make this problem worse by repealing the regulation that required that employees be permitted to keep their tips, except pursuant to a legal tip pool.
In December, the Department of Labor announced a proposed rule change that would have allowed employers to do whatever they wanted with tips earned by employees, including keep them, as long as the employees made at least $7.25 per hour.
The administration claimed that this rule change would have allowed employers to distribute tips more equitably among their employees. For instance, it would have permitted dishwashers and other kitchen staff to be a part of a tip pool, something previously not permitted.
Labor advocates cried foul, arguing that the change would have resulted in a massive wealth transfer from workers to employers. An analysis by the Economic Policy Institute estimated that the rule would have cost workers at least $5.8 billion per year in lost income.
A Department of Labor analysis that was initially kept from the public came to similar conclusions.


The new federal budget deal opens the door to tip pooling that includes kitchen staff as long as all employees earn at least $7.25 per hour.
 

Restaurant Inequality

Whether or not the administration was being honest about its real motivations, the Department of Labor was right to draw attention to a form of structural inequality that exists in the restaurant industry.
Tipped workers typically make two to four times that of non-tipped workers, even when their formal salary is just $2.13 an hour. The ones who earn gratuities, such as waiters, bussers and food runners, are called “front of the house” employees. Meanwhile, “back of the house” employees, like cooks, dishwashers and other kitchen staff, don’t earn tips.
Because racial minorities are more likely to be employed in non-tipped positions, this income inequality results in a stark racial divide as well. A study by the Restaurant Opportunity Centers United, a national restaurant worker advocacy group, found that white food service workers earn $3 more per hour on average than workers of color, in part because of the tips that white workers are more likely to earn.
As long as federal regulations forbade tip pools to include these back of the house employees, this structural inequality was likely to persist.

What the Budget Deal Does

The measure passed as part of the budget deal addressed both the concern about employers’ taking workers tips and the structural pay gap.
It states that under no circumstances can employers or managers take workers’ tips. But it also suspends the Obama regulation that prohibited tip pooling with back of the house employees as long as all employees earn at least $7.25 per hour.
In other words, this will allow employers to distribute tips more fairly and better compensate their lowest-paid employees, who often work in back, while preventing owners from using the rule to line their own pockets.
The ConversationCongress rarely passes legislation that is win-win, but in this situation, it has managed to do just that.
Nicole Hallett, Assistant Clinical Professor of Law, University at Buffalo, The State University of New York
This article was originally published on The Conversation. Read the original article.

DON'T MISS

Pope Francis in Critical Condition After Long Respiratory Crisis

DON'T MISS

Musk Gives All Federal Workers 48 Hours to Explain What They Did Last Week

DON'T MISS

Fresno State Suspends 2 Players, Removes Another Amid Gambling Investigation

DON'T MISS

Israel Delays Release of Palestinian Prisoners, Citing ‘Degrading’ Hostage Handovers

DON'T MISS

Officer Killed After Gunman Took Hostages at Pennsylvania Hospital

DON'T MISS

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

DON'T MISS

Fired Employees Fear Beloved Yosemite National Park Will Lose Its Luster

DON'T MISS

US and Ukraine Nearing Rare Earths Deal That Would Tighten Relationship

DON'T MISS

Trump Fires Chairman of the Joint Chiefs of Staff and Two Other Military Officers

DON'T MISS

Less Is More: 5 Ingredient Dinners Are Easier Than You Think

UP NEXT

Musk Gives All Federal Workers 48 Hours to Explain What They Did Last Week

UP NEXT

Fresno State Suspends 2 Players, Removes Another Amid Gambling Investigation

UP NEXT

Israel Delays Release of Palestinian Prisoners, Citing ‘Degrading’ Hostage Handovers

UP NEXT

Officer Killed After Gunman Took Hostages at Pennsylvania Hospital

UP NEXT

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

UP NEXT

Fired Employees Fear Beloved Yosemite National Park Will Lose Its Luster

UP NEXT

US and Ukraine Nearing Rare Earths Deal That Would Tighten Relationship

UP NEXT

Trump Fires Chairman of the Joint Chiefs of Staff and Two Other Military Officers

UP NEXT

Less Is More: 5 Ingredient Dinners Are Easier Than You Think

UP NEXT

Trump-Putin Summit Preparations Are Underway, Russia Says

Israel Delays Release of Palestinian Prisoners, Citing ‘Degrading’ Hostage Handovers

9 hours ago

Officer Killed After Gunman Took Hostages at Pennsylvania Hospital

9 hours ago

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

16 hours ago

Fired Employees Fear Beloved Yosemite National Park Will Lose Its Luster

16 hours ago

US and Ukraine Nearing Rare Earths Deal That Would Tighten Relationship

16 hours ago

Trump Fires Chairman of the Joint Chiefs of Staff and Two Other Military Officers

16 hours ago

Less Is More: 5 Ingredient Dinners Are Easier Than You Think

16 hours ago

Trump-Putin Summit Preparations Are Underway, Russia Says

16 hours ago

Warren Buffett Offers Trump Some Advice While Celebrating Berkshire’s Success

16 hours ago

Hungarians Will Decide Whether Ukraine Can Join the European Union, Orbán Says

16 hours ago

Pope Francis in Critical Condition After Long Respiratory Crisis

ROME — Pope Francis was in critical condition Saturday after he suffered a prolonged asthmatic respiratory crisis while being treated for pn...

9 hours ago

9 hours ago

Pope Francis in Critical Condition After Long Respiratory Crisis

9 hours ago

Musk Gives All Federal Workers 48 Hours to Explain What They Did Last Week

9 hours ago

Fresno State Suspends 2 Players, Removes Another Amid Gambling Investigation

9 hours ago

Israel Delays Release of Palestinian Prisoners, Citing ‘Degrading’ Hostage Handovers

9 hours ago

Officer Killed After Gunman Took Hostages at Pennsylvania Hospital

16 hours ago

Kash Patel Plans to Move Up to 1,500 Workers Out of Washington

16 hours ago

Fired Employees Fear Beloved Yosemite National Park Will Lose Its Luster

16 hours ago

US and Ukraine Nearing Rare Earths Deal That Would Tighten Relationship

Help continue the work that gets you the news that matters most.

Search

Send this to a friend