WHO GETS THE TIP?
Possible changes in tip-pooling regulations could allow restaurant owners to decide who gets gratuities
Monday was the cutoff for public comments regarding the Department of Labor’s proposed changes in tip pooling announced in December. The change could potentially unravel a 2011 Obama-era law that prevents employers from collecting tips and distributing them to anyone other than tipped employees who, in Pennsylvania, earn $2.83 an hour.
The Trump administration’s proposed changes would potentially allow restaurant owners to distribute tips at their own discretion — or not to distribute them at all — as long as workers are paid at least the federal minimum wage of $7.25 an hour and employers don’t take a tip credit. A tip credit is the difference between the minimum required cash wage of $2.83 an hour and the current minimum wage of $7.25. The proposal is similar to the regulations before the 2011 law.
The Labor Department’s argument — supported by the National Restaurant Association — is that tips create an earnings gap between front-of-house workers such as bartenders and servers, versus back-of-house staff such as dishwashers and line cooks.
John Longstreet, president and CEO of the Pennsylvania Restaurant and Lodging Association, says the DOL rules should be “very clear and uniformly enforced,” in whatever changes are made regarding tip-pooling regulations — something that has not been the case in the past, he said. “We’ve always felt that people actively involved in the service process,” should be included in tip-pooling he said, such as hosts and food expediters.
The comment period was
initially scheduled to end Jan. 4, but the DOL issued an extension of the public comment period to Feb. 5. There are close to 350,000 comments posted online; however, even if a vast majority of commenters weigh in against changes in the law regarding tip pooling, the 2011 regulations can still be rolled back.
Last month’s poll from D.C.-based Hart Research Associates found that 82 percent of Americans opposed the proposal to allow companies to control tips left by customers.
“This rule, backed by the National Restaurant Association, is just another attempt to keep workers’ wages low and let customer tips make up the difference,” Saru Jayaraman, president of Restaurant Opportunities Centers United, said in an official statement. “The real barrier to fair wages and working conditions is the sub-minimum wage system, in which tipped restaurant workers make as little as $2.13 at the federal level. Establishing One Fair Wage for all workers, tipped or untipped, should be the priority for America’s 12 million restaurantworkers.”
Tensions have been exacerbated, with Bloomberg Law reporting last week that senior department officials at the Department of Labor ordered the removal of “unfavorable internal analysis from a new tip pooling proposal, shielding the public from estimates that showed employees could lose out on billions of dollars in gratuities.”
Locally, there could be upheaval regarding servers’ wages with the proposed changes.
Bill Fuller, partner in Big Burrito restaurant group, which includes spots such as the many locations of Mad Mex along with Casbah and Soba, both in Shadyside, noted that currently an average company line cook makes between $12 and $17 an hour and works a 7- to 10-hour shift a day.
A server may make between $20 and $25 an hour with gratuities over approximately six-hour shifts. The company’smost experienced kitchen staff makes $20 an hour, while the most experienced, full-time servers makearound $30 an hour.
As far as how those workers’ salaries would shift if regulations change, he said he hadn’t been tracking the discussion and had not considered whether Big Burrito would implement any changes to its current systems.
Legally, Big Burrito has been required to delineate which employees are kitchen staff and which are servers, even in a catering operation.
As far as restaurant owners pocketing any portion of tips, “That’s scummy,” he said. “Protections should stay in place for that.”
Local service workers are definitely concerned, said Stephanie Dooley, cofounder of the local service industry website Tipped Off. Ms. Dooley works at Sienna Mercato Downtown, while her website partner Ashley Hedland is a service-industry worker at DiAnoia’s Eatery in the Strip District.
“People are worried about it,” Ms. Dooley said. “From our end, there are things that don’t work in the industry in terms of policy and pay. But having owners in charge: It does not empower the worker. In fact, it takes the power away from them.
“We all know how minimal the tip margin is,” she said, which could make it more tempting for restaurant owners to keep tips for restaurant expenses.
Ms. Dooley predicted that with the proposed changes, “restaurants will find they won’t have as many employees,” in an already stretched labor market in regard to restaurants.
She noted that even with the rise of no-tipping, there are a lot of people who love working for tips, for the “control,” that allows them to earn more or less, depending on their performance and the number of hours they’rewilling to work.
As far as the proposed tip-pooling changes, “Employees aren’t being taken into account at all,” Ms. Dooley said. “For a lot of people, this is their career, and they’re totally left out of the conversation.”