Putting tips up for grabs

Across the country in businesses where workers depend on tips to supplement their wages, the U.S. Labor Department’s soon-to-be-announced decision on how gratuities can be divided will have a major impact. If, as expected, the decision allows employers to decide how tips are split, service employees could lose money. We wouldn’t expect this to happen in Northern New Mexico, where so many service businesses are locally owned and employers often treat their employees like family. Often, the servers and cooks are family.

The trouble with the policy change nationwide is that it could allow business owners to simply pocket tips rather than authorizing wider pooling of tips among all employees at an establishment. That would abandon decades of Fair Labor Standards Act policy that treated tips as property of employees, not businesses.

What the changes are supposed to be addressing, however, is a disparity between wages of workers who deal with customers — servers, bussers, bartenders and the like — and the back-of-the-house employees, such as cooks or dishwashers.

Current regulations dating back to 2011 allow tips to be shared, but only among what is described as “guest-facing” service staff. That means the server who picks up dirty dishes can get a tip, but not the worker who washes the dishes. To many, that seems unfair, although staffer who get tips also are often paid less than the local or even federal minimum wage — tips are supposed to make up the difference. A dishwasher has a guaranteed paycheck.

Under the proposed regulations, owners of a business could decide how to allocate tips so long as all workers received at least federal minimum wage, which is $7.25 an hour. In all likelihood, some employees would get less money and others more, but that’s only if bosses actually redistributed the tips — many critics of the proposal are afraid owners will simply pocket them. The policy is not clear on that point.

According to The Washington Post, the Labor Department has estimated that the new rule would affect some 1 million waiters and waitresses, as well as 200,000 bartenders. Workers in other industries, such as hairstylists and manicurists, also would fall under the rule change. However, if an employer continues to pay less than the minimum wage, workers would still be in charge of their tips, so the new rule wouldn’t affect all service workers.

Over the 60-day comment period, which ended earlier this month, some 374,000 people had something to say about the proposed rule, much of it negative. That’s likely because the rule would hit workers in their pocketbooks. A left-leaning think tank, the Economic Policy Institute, believes some $5.8 billion in tips across the nation could be at risk if the rule takes effect.

While pooling tips for all workers could help even out wages, leaving in the loophole that business owners could keep the tips is too big a temptation for some corporate bosses who are removed from their employees. It’s simply wrong for bosses to be able to pocket tips meant for the hardworking people on the front lines.