President Donald Trump’s administration has taken aim at yet another workplace regulation put in place by the Obama White House, this time seeking to undo a protection for restaurant servers that annoyed the industry’s lobby.
In plans detailed Monday, the Labor Department said it intends to roll back what’s known as the “tip pooling” rule, which limits the scenarios in which tipped workers can be forced to share their gratuities with other employees. If the rule is done away with, it will be easier for management to divvy up the tips that flow to front-of-the-house restaurant and bar staff as it pleases.
The restaurant lobby claims the change would steer more money from gratuities into the pockets of back-of-the-house employees like cooks and dishwashers, who do unseen work and don’t get tipped by patrons. But worker advocates say the way the proposal is written, nothing would stop management from simply keeping the servers’ tips for the house, rather than dispersing them among staff.
The National Restaurant Association, an industry lobby, said in a statement it “applauds” the Trump administration’s decision to rework the tip-pooling regulation. The group sued the Obama administration over its rule, arguing that the regulation was illegal. A federal appeals court upheld the rule, and the Supreme Court is now considering whether to review the case.
On Tuesday, the worker advocacy group Restaurant Opportunities Center United urged its allies to file public comments against the Trump proposal, calling it “just another attempt to keep workers’ wages low and let customers make up the difference.”
Groups like ROC United generally don’t like the idea of required tip sharing, arguing that it forces one worker to subsidize the pay of another. If cooks deserve more money, they argue, then the restaurant owner should pay them more ― rather than shift a server’s tips their way.
“This rule is just another attempt to keep workers’ wages low and let customers make up the difference.”
Under President Barack Obama’s regulation, servers’ tips could never be funneled to non-tipped workers. The new proposal would allow it in restaurants that pay employees the full minimum wage and don’t claim what’s known as a tip credit. The tip credit lets employers pay a reduced minimum wage ― in some states, as little as $2.13 per hour ― and have the rest of the wages come in the form of gratuities. Tip-pooling still wouldn’t be allowed in those situations.
Employment lawyer Randi Kochman said the restaurant industry has balked at the limits on tip pools imposed by the Obama administration. “Tip pools are popular,” she told HuffPost. “It’s something that the industry likes, it allows them to attract good people, and to hedge against morale problems. [The Obama regulation] was not well received.”
“If you’re in the hospitality world,” she said, the rule’s rollback “is a big deal.”
The Labor Department claimed that the change by Trump officials would ”help decrease wage disparities” between those who work for tips and those who don’t. “These ‘back-of-the-house’ employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers,” the agency said in a statement.
But the proposed rule as published does not explicitly require that the tips stay among the workers. Heidi Shierholz, the Labor Department’s former top economist under Obama, said she expects that at least some restaurant owners would appropriate the tips for themselves if the letter of the law allows it.
“Under the administration’s proposed rule, as long as the tipped workers earn minimum wage, the employer can legally pocket those tips,” Shierholz, now a senior economist at the Economic Policy Institute, wrote in a blog post.
Rules like the tip-pooling regulation undergo a period of public comments before they are finalized by regulators. The Labor Department is offering a relatively short comment period ― 30 days ― before it proceeds with revamping the regulation.
Loosening the rule is right in line with Trump’s assault on regulations since he took office. As HuffPost previously reported, many of the changes his administration has pursued have benefited lower-wage employers like retail and restaurant chains. Trump has already shelved reforms to the overtime pay system Obama had sought, which would have affected millions of workers, and shied away from the minimum wage hike his predecessor championed.