Should restaurant wait staff and bartenders get to keep customer tips — or should the tips belong instead to their employers?
Under current law the employees get to keep the tips, but under President Trump the United States Department of Labor (DOL) is considering a proposed new rule reversing existing practice. If a proposed new rule goes into effect, bartenders and servers could face a substantial pay cut. The proposed new rule would rescind a 2011 rule amending the agency’s interpretation of the Fair Labor Standards Act. The new rule would allow restaurant owners to keep all of the tips left by customers—without the customers’ knowledge or consent—as long as the restaurants pay their wait staff and bartenders at least the minimum wage, currently $8.25 an hour in Florida.
A new report by the National Employment Law Project (NELP) and Restaurant Opportunities Center United (ROC), both New York-based employee advocacy organizations, shows that servers and bartenders depend on tips for more than half of their earnings, with the median share of hourly earnings from tips accounting for 58.5 percent of wait staff’s earnings, and 54 percent of bartenders’ earnings.
The national median monthly tip earnings for wait staff and bartenders is $867.00. On an annual basis, servers and bartenders have median earnings of $19,990 and $20,800, respectively, according to a Bureau of Labor Statistics survey of employers that measured employment and wages.
The U.S. Census Bureau’s current population survey by the Economic Policy Institute and the University of California-Berkeley found that even including tips the national median hourly earnings for waiters and bartenders are just $10.11, only $2.86 above the current federal wage minimum of $7.25.
Black workers in these occupations have a national median hourly wage of $9.62, including tips, and Latino workers earn $9.93—suggesting that taking gratuities away from tipped workers will greatly impact workers of color and their families, according to the report.
“The Trump administration’s proposed rule undermines decades of federal and state law and precedent that protects tips as the property of workers, not their employers,” said Teofilo Reyes, national research director of Restaurant Opportunities Centers United and report co-author. “Our research shows that allowing employers to take control of their employees’ tips would lead to greater financial instability and poverty. We also know that tip instability leads to greater sexual harassment for America’s restaurant workers. This rule would only serve to keep all restaurant workers’ wages low and let customer tips make up the difference.”
The DOL has suggested that restaurant owners might use tips to give their workers more hours of work, at a lower effective wage, or to subsidize wages for back-of-the-house non-tipped employees, but it acknowledges that employers could use the tips in any manner they see fit, such as for capital improvements, the report said. The DOL says that its proposal would help decrease wage disparities between tipped and non-tipped workers such as restaurant cooks and dish washers.
“A standard economic analysis found that $5.8-billion will be transferred from workers directly to employers as a result of this rule,” according to the report.
After lawmakers and workers’ advocates called on the Department of Labor to give stakeholders more time to weigh in, the agency extended the original deadline for comments on its proposal to let hospitality employers redistribute workers’ tips if they pay at least minimum wage.
The DOL will accept comments on its proposed new rule until February 5. So far the Department has received almost 110,000 comments.
