New rule to resolve tip jar squabble

Restaurants in the US could soon require waiters, bartenders and delivery drivers to split tips with their coworkers or even managers if a proposed rule from the Department of Labour takes effect.

The move would reverse a rule enacted during the Obama Administration, which declared tips the property of the workers who collected them.

“The proposal would help decrease wage disparities between tipped and non-tipped workers,” the department said this week.

The rule would apply only to firms that pay tipped employees at least the federal minimum wage of US$7.25 ($10.50) an hour and allow compensation sharing through a “tip pool” with workers who usually don't get the extra cash, such as cooks.

“These ‘back of the house' employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers,” the department said.

Restaurant industry groups commended the step towards scrapping the regulation, but worker advocates fear it opens the door for companies to absorb their employees' tips.

Heidi Shierholz, senior economist at the Economic Policy Institute, a left-leaning think tank in Washington, said the rule leaves room for employers to keep the tips for themselves, as long as the tipped employees earn a base minimum wage.

“This would be a big transfer of money from workers to employers,” said Shierholz. Christine Owens, executive director of the National Employment Law Project, also condemned the effort.

“If companies have trouble retaining non-tipped workers because their pay is so low, the solution is for the companies to raise the wages of those workers,” she said.

Paul DeCamp, a lawyer who represents the National Restaurant Association, said pooled tips were a way to support lower-paid workers, who work in the kitchen, for example.

He said restaurants that abuse pooled tips could face economic consequences, including higher employee turnover and lawsuits.

“If you've got restaurants where you've got tipped employees but the restaurants are keeping all the tips, you're not going to have those tipped employees anymore,” he said.

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