Spending Bill Would Prevent Employers From Pocketing Workers' Tips

Democrats say they've neutralized the most controversial piece of Trump's "tip pooling" rule. But critics say the rest of the rule is still bad for workers.
Sen. Patty Murphy (D-Wash.) worked with Trump's labor secretary on a compromise tucked into the federal spending bill that makes tip theft illegal.
Sen. Patty Murphy (D-Wash.) worked with Trump's labor secretary on a compromise tucked into the federal spending bill that makes tip theft illegal.

WASHINGTON ― Tucked into the $1.3 trillion spending bill unveiled by congressional leaders Wednesday night is a provision designed to prevent restaurants from pocketing their servers’ tips.

The measure inserted by Democrats would put some limits on the regulatory changes being pursued by the Labor Department under President Donald Trump. The department has tried to reform wage regulations so that employers can require tipped workers to “pool” gratuities and share them with other non-tipped workers, like cooks and dishwashers, under certain circumstances.

But the way Trump’s Labor Department rewrote the rules, there would be nothing to legally prevent the employer from keeping some or all of the tips, so long as the tipped worker earned the full minimum wage before gratuities. That prospect made the proposal extremely contentious in Washington, and highly unpopular among those who submitted public comments on it.

The provision included in the tentative spending deal would make such “tip theft” illegal. Democrats hailed it as a victory for the local bartender. Congress, however, still needs to pass the bill by Friday night in order to avoid a government shutdown.

Sen. Patty Murray (D-Wash.), ranking member of the Senate’s labor committee, said she worked on the change with Trump’s labor secretary, Alexander Acosta, who oversaw the controversial rewrite of the tipping rules. Murray hammered Acosta for months over the proposal, but praised him Wednesday for working out a compromise.

“I’m pleased that Secretary Acosta listened, reversed course, and worked with me on legislation to make sure that big businesses can’t steal their workers’ tips,” Murray said in a statement. “For the millions of workers who rely on their tips to pay their bills and support their families, most of whom are women, this change comes as a sigh of relief.”

The language inserted in the spending bill would amend the Fair Labor Standards Act to forbid employers from steering tip money toward owners, managers or supervisors, requiring that it stay among non-management employees. It would also allow workers to sue to recover stolen tips and win added damages.

Still, not all Democrats are pleased with the arrangement.

While the deal arranged by Murray would nix the most controversial piece of the tip rule proposal, it would leave the rest of it more or less intact. If implemented, the rule would allow employers to force front-of-the-house employees to share their gratuities with workers in the back, so long as the employer paid the full minimum wage, rather than the reduced, “tipped minimum wage.” President Barack Obama’s administration had banned the practice under any circumstances.

Critics of the Trump administration’s proposal ― including many workers interviewed by HuffPost ― say that servers and bartenders shouldn’t be subsidizing the pay of non-tipped workers, even when everyone is earning the full minimum wage before tips. Rep. Bobby Scott (Va.), ranking Democrat on the House labor committee, agrees with that sentiment. He signaled Wednesday that he would oppose a deal like the one hashed out by Murray.

“I am opposed to language that would allow employers to confiscate half or more of the workers’ tips” to redistribute them, Scott said in a statement to HuffPost. Scott’s opposition to the deal was first reported by Politico.

Democratic Rep. Mark Takano (Calif.) is “not thrilled” with the arrangement either, said spokesman Josh Weisz. “It does prevent outright wage theft, but it still undermines the basic principle that tips are the property of the worker who earns them,” Weisz said.

Critics of the tip rule had been expected to file legal challenges if the Trump administration moved forward with it. But by clarifying that employers can’t keep tips for themselves, the provision in the spending bill would take a lot of political heat off the rule, making it more likely it would be finalized and implemented. Murray may view the deal as much better than nothing, since the Labor Department could have moved forward with what it originally proposed.

Heidi Shierholz, an economist at the Economic Policy Institute, a think tank that was highly critical of the original proposal, said the deal reached Wednesday is “not perfect,” as it could still lead to some servers’ earnings being shifted to other workers. But with the added protections, “It is clearly better for workers than if the Department of Labor’s proposed rule had been finalized. There’s no question,” she said.

Some of the tip rule’s fiercest critics were backing off Wednesday once the arrangement became clear. Restaurant Opportunities Center United, an influential worker center, said it would be satisfied with the rule, so long as management couldn’t take a cut of the tips.

We’re very, very happy with the language,” Saru Jayaraman, the group’s co-director, told HuffPost. “It’s a total win for workers.”

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