The U.S. Department of Labor (DOL) has just proposed a rule that would allow employers to pocket tips given to workers by customers, a move that is estimated to provide a $5.8 billion windfall to restaurant owners and operators across the U.S.
According to the Economic Policy Institute (EPI), the DOL proposal would allow restaurants to take the tips that servers earn and share them with untipped employees like cooks and dishwashers. But, there is nothing in the rule that actually requires that employers distribute “pooled” tips to workers. As long as tipped workers earn minimum wage, employers could legally pocket those tips under the proposed regulation.
EPI reports that its research shows that even though employers currently are prohibited from pocketing tips, many still do. Research on workers in three large U.S. cities (Chicago, Los Angeles, and New York) finds that 12 percent of tipped workers had tips stolen by their employer or supervisor.
So, EPI contends, if that much tip thievery is already going on, it's reasonable to expect that once this rule is finalized, the practice will become much more prevalent in the restaurant industry.
The proposal has promoted a flurry of outrage and opposition as 17 Democratic state attorneys general have expressed their opposition to the proposal, teeing up arguments for a lawsuit alleging that shelving an economic analysis violates the Administrative Procedures Act. Opponents say that DOL ignored an economic analysis showing the impact of the proposal on workers.
Top Democrats in Congress are pushing DOL to hold a public hearing on the proposal. Sending a letter making that request were Reps. Keith Ellison (D-MN), Bobby Scott (D-VA, Mark Taken (D-CA) and Suzanne Bonamici (D-OR). Their letter noted that more than 115,000 public comments have been submitted to DOL on the proposal, many of them from workers.
In my view, DOL's proposed rule is just another example of the Trump Administration's policy bias toward business and employers and against workers -- the very people Trump appealed to during his campaign for the Presidency.
Once again, I ask: Is this how Trump intends to #MAGA?