Federal Proposal Would Give Restaurants Servers' Tips

"Roughly $5.8 billion in workers' tips would be transferred from workers to employers," one critic said

A proposal from the Department of Labor that would give employers more discretion over tips could have a big financial impact on workers in the area who get tips. 

Under the proposed change, employers who pay their staff minimum wage could be able to take, keep or redistribute the tips that the employees earn.

This would reverse a standard that has been in effect since 2011, which says that tipped workers -- regardless of their hourly wage -- are entitled to the gratuity they earn.

At La Tomate Italian Bistro, near Dupont Circle, server Raphael Gamero said he opposed the plan. He has been a waiter for 20 years.

"We make at the most like $25 an hour. If I'm going to share with the kitchen staff or more people, I'm going to make what -- $15 an hour?" he said. 

Although the proposed change would increase his hourly rate from $3.30 an hour to $12.50 an hour, he would have to give any money made in tips to his employer.

The exception to the current tip regulations is that tipped workers can pool tips to split among themselves and some other workers “who customarily and regularly receive tips,” like hosts and hostesses.

In the proposal, the Department of Labor argues that the Fair Labor Standards Act’s limited flexibility does not allow for “back of the house” employees like cooks and dishwashers to always be included in a tip pool.

The Economic Policy Institute studied the change proposed by the Labor Department, and concluded it would reduce the average waiter’s income by $1,000 a year. 

"Roughly $5.8 billion in workers' tips would be transferred from workers to employers as a result of this rule," economist and policy director Heidi Shierholz said. 

The proposed change would give employers the ability to expand the tip pool to more workers, but the rule’s current language doesn’t specify that the tips have to go back to employees at all.

On Monday, the attorneys general of D.C., Maryland and Virginia joined 14 colleagues in co-signing a letter expressing disagreement with the proposal.

“Absent concrete definitions of or limitations on valid tip pool participants, the [decision] would permit employers to share in such tip pools or even collect all employee tips as their own,” the letter said. “In fact, the Notice itself acknowledges that rescinding the 2011 rule would permit employers to use gratuities left for servers to ‘make capital improvements’ or ‘lower restaurant menu prices’ and notes that tips may be ‘utilized in part (or in full) by the employer.’”

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