by
Melody Hahm
It’s
illegal for employers to take tips from employees. But, the Department
of Labor (DOL) is proposing a new rule that would allow employers to
take their workers’ tips as long as they earn at least minimum wage.
Published on the Federal Register on Tuesday, the new rule
would rescind a regulation enacted during the Obama administration that
mandates employers distribute tips to their tipped employees. Under the
new rule, restaurants would be able to pool tips from servers and share
them with untipped employees like dishwashers.
Heidi Shierholz, senior economist and director of policy at the Economic Policy institute (EPI), points to research
that shows illegal wage theft exceeds $15 billion every year. “It seems
obvious that when employers can legally pocket the tips earned by their
employees, many will do so,” she said.
The
DOL argues that tip pooling helps reward those who don’t normally get
tips. Groups like the Oregon Restaurant and Lodging Association assert that this rule “would help decrease wage disparities between front-of-house and back-of-house employees.”
But labor advocates say the likely outcome would be employers pocketing those tips.
“If
companies have trouble retaining non-tipped workers because their pay
is so low, the solution is for the companies to raise the wages of those
workers—not for the labor department to rig the rules so employers can
essentially steal earnings from tipped workers to subsidize the
businesses’ low wage model,” said Christine Owens, the executive
director at the National Employment Law Project (NELP).
The public can submit comments within 30 days. While comment periods typically range from 30 to 60 days, agencies may also provide longer time periods (180+ days).
Shierholz
notes that this is an “outrageously short window for commentary,”
particularly because it was published during the holiday season.
While there’s the possibility of an extension, it’s a clear move to reduce public input, according to Shierholz.
“DOL
is trying hard to hide how much this change in existing protections
will cost workers as it tries to sneak this rule through an
extraordinarily short public comment period over the holidays,” added
Owens.
Lack of analysis
Another
glaring issue with the proposal is the complete absence of economic
analysis, according to Owens. She says that analysis would inevitably
show the transfer of money from workers to employers, particularly big
restaurant chains.
This analysis is “essential information the public needs to make informed comments about the proposal,” she said.
In
fact, Shierholz and her team at EPI are currently working on a way to
quantify the economic disadvantages the said rule would have on
employees. By using the Bureau of Labor Statistics’ current population
survey and IRS data, the EPI is deriving a way to examine how much money
would be transferred from employees to their bosses. With the caveat
that both sources tend to underreport tips, Shierholz asserts that the
DOL has a legal obligation to do a thorough analysis.
“Make
no mistake: as a result of this rule, workers will take home less, and
their loss will be employers’ gain,” she said. “And Trump’s DOL is
willing to break the requirements of the rulemaking process to attempt
to hide that fact.”
