As we noted back in December, the Labor Department is pushing a beautiful new rule that will allow restaurant owners to take servers’ tips, ostensibly to “pool” them and share tips with workers in the back of the house, just as long as everyone makes at least minimum wage before tips. At least, that’s how Labor is selling the rule change: as a way of sharing the wealth (but not socialism, heavens) and giving employers a way of fairly compensating everyone, as long as your definition of “fair” means taking servers’ tips away. Besides, the rules that currently protect workers from having their tips taken away by employers were put in place by Barack Obama, so you know they have to be rescinded.
There’s a little problem with that selling point, of course, as the Economic Policy Institute (EPI) points out:
DOL has masked the fact that this rule would be a windfall to restaurant owners and other employers — out of the pockets of tipped workers — by making it sound as if this rule is about tip pooling. Of course, once employers have full control of tips, one of the things they could do with those tips is distribute them to “back of the house” workers like dishwashers and cooks. But the proposed rule does not require employers to distribute the tips, so employers would be no more likely to share tips with back-of-the-house workers than they would be to make any other choice about what to do with a business windfall, including using the money to make capital improvements to their establishments, to increase executive pay, or to line their own pockets.
To add to the awfulness of the proposed rule, EPI’s look at the possible effects of the tip-stealing rule includes a hell of a surprise, at least if you’re still capable of being surprised by anything this administration does:
We estimate that if the rule is finalized, every year workers will lose $5.8 billion in tips, as tips are shifted from workers to employers.
Of the $5.8 billion, nearly 80 percent — $4.6 billion — would be taken from women who are working in tipped jobs.
It’s worth noting that the analysis includes not just restaurant servers, but other occupations where tips are common, like bartenders, casino workers, hairstylists, and “other personal appearance workers.” Also, if you want to quibble with the numbers some, the EPI analysis appears to assume a worst-case scenario where all employers who couldtake employees’ tips would actually do that, and we’d like to hope that there is at least some tiny percentage of employers who are damnfool liberals who think paying a decent wage is worth doing. We could be wrong about that, but Yr Wonkette is an invertebrate quibbler — we’ll nitpick, but without much backbone.
In any case, there’s plenty of reason to think EPI’s numbers are grounded in justified economic pessimism. As the authors note, research already shows that 12 percent of tipped workers have their tips illegally taken by employers or supervisors — and that’s with laws prohibiting such theft:
The fact that illegal tip theft is so prevalent underscores that when employers can legally pocket tips, many will. And basic economic logic dictates that it is highly unlikely that back-of-the-house workers will get more pay. There is currently no limit to what these workers can be paid, so employers are already paying their back-of-the-house workers what they need to pay to attract workers willing to work in those jobs. If employers do share some tips with them, it will likely be offset by a reduction in their base pay, leaving their take-home pay largely unaffected.
Not surprisingly, the Labor Department hasn’t seen fit to offer any analysis at all of the potential amount of tips that might be shifted from workers to employers. Why would they, apart from some silly legal requirement that the costs and benefits of any new rule be quantified “to the fullest extent that these can be usefully estimated”? A full accounting would put the lie to the notion that this rule is mostly about benevolent employers pooling tips to help line cooks and dishwashers. As EPI notes, the Labor Department
couldn’t both produce a good faith estimate (which would necessarily have shown a substantial shift of tips from workers to employers) and maintain the fiction that this rule is primarily about tip pooling, so they opted to ignore legally required steps in the rulemaking process.
The new rules have not yet gone into effect, and the public comment period on this abomination remains open until February 5. To leave a comment for the Labor Department (or for Labor to ignore, this being the Trump administration), point your browser thisaway.
And don’t forget to tip your server — or after February, their boss.