A measure that will prohibit employers from requiring that wait staff share their tips with back-of-the-restaurant workers, such as cooks and dishwashers, was approved by Congress and signed into law by President Donald Trump on March 23.
The provision is a small part of a mammoth omnibus spending bill to fund the federal government. The Department of Labor (DOL) last December had proposed allowing employers the option of requiring workers who receive tips to share that money with non-tipped colleagues. The proposed rule would have undone an Obama-era prohibition on the practice.
The DOL's proposed tip-sharing rule would not have applied to employers that take a tip credit—meaning that they pay tipped workers a rate below the federal minimum wage and workers make up the difference in tips.
Highlights from media coverage of this latest development in the tip-sharing controversy below.
Restaurant Owners Barred from Taking Servers' Tips
Worker advocates praised the provision to prohibit employers from sharing server tips with others in a restaurant—including, they feared, the employers themselves. Restaurant owners had argued that former President Barack Obama's Labor Department had overreached when it issued the final regulation banning tip-sharing more than a year after the U.S. Court of Appeals for the 9th Circuit ruled specifically that employers could split server tips with traditionally non-tipped employees if the businesses did not claim a tip credit.
Worker advocates and labor lawyers, however, argued that the rule would give owners control of tips, which they could distribute as they see fit.
Labor Advocates See Further Gains
Now that the tip-sharing proposal has been stopped, the next fight for labor organizations is raising wages for tipped workers, said Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers (ROC) United.
"The next step is that we need one fair wage—the elimination of the lower wage for tipped workers so that this incredibly large workforce, the majority of whom are women, is not entirely dependent on customer tips to feed their families," she said. "When this omnibus bill passes, it will represent an enormous step toward that final victory."
Restaurant Owners Sought Flexibility
Restaurateurs and other food service providers can require front-of-the-house staff such as servers, bartenders and bussers to pool their tips. Business owners had welcomed the DOL's proposed changes clarifying that back-of-the-house staff could be included in the tip pool. In their view, the restaurant experience is created by the combined efforts of the front and back of the house, and tip-sharing allows cooks and other crew to be rewarded for good service.
Implementing and managing a legally compliant tip pool, however, would not have been simple, and would have required distinguishing tips from service charges, among other considerations.
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Source: Society for Human Resource Management (SHRM)