Employers would be able to distribute tips as they see fit
Working in a restaurant is a tough gig. That’s especially true for the cooks and dishwashers behind the scenes, who often don’t have the opportunity to reap the same tip rewards that wait staff and deliverers do. A new policy seeking to correct that imbalance has been met with equal enthusiasm and skepticism.
In a statement this week, the Trump administration’s Department of Labor formally announced its plans to roll back regulations against tip pooling in an effort to “help decrease wage disparities between tipped and non-tipped workers.” Under the proposed new (old) policy, all restaurant employers paying everyone on staff the full federal minimum wage of $7.25 would be able to “pool” tips earned by front-of-house staff and redistribute (or pocket) them as they see fit.
Restaurants who claim the Fair Labor Standards Act tip credit, which allows them to pay wait staff as little as $2.13 an hour in direct wages as long as tips push them over federal minimum wage, would still be ineligible for tip pooling. This marks a change from the DoL policy enacted in 2011, which declared that tips were the property of the workers who collected them no matter their base wage.
At a time when some restaurants are eliminating tipping in favor of more progressive compensation schemes, some restaurateurs and industry advocacy groups see tip pooling as a way to recognize the behind-the-scenes staff who shape dining experiences.
“The quality of the food or the speed of the service is a big part of the experience, and a lot of times that’s driven by the kitchen, not just the server,” says Mark Barak, who owns and operates Claudette and two La Pecora Bianca locations in Manhattan. “Would having more flexibility between front and back of house be positive? I think yes.”
At the same time, the proposed policy wouldn’t require restaurants to distribute tips among staff at all, effectively allowing them to pocket what were once employee wages. “This would be a big transfer of money from workers to employers,” said Heidi Shierholz of the Economic Policy Institute. “The restaurant industry has wanted this forever.”
Labor advocates worry that this opens the door to abuse and exploitation, making life more difficult at a time when the “Fight for $15” push underscores the inadequacy of a minimum wage of $7.25. “By allowing employers to take control of their employees' tips, this regulation would push a majority-women workforce ... further into financial instability, poverty, and vulnerability to harassment and assault," said Restaurant Opportunities Center United president Saru Jayaraman.
Still, Barak isn’t worried that unscrupulous owners would be able to get away with hoarding tips for long: “It’s such a competitive industry that ultimately staff need to be paid competitive wages. I think any restaurant that would take advantage of that loosening of restrictions to do things other than pay staff competitively would suffer.”
Current federal data suggests the median wait staff salary is $9.61/hour, while the median dishwasher salary is $10/hour, though it’s not clear if (or how) tips are factored into either calculation. The public will have 30 days from December 5 to submit comments on the proposed policy change before it’s officially enacted.