RALEIGH, N.C. -- The U.S. Department of Labor is considering a proposal that would force some waiters, bartenders, hairstylists and other tip earners to give their gratuities to their employers.
There are roughly 1.29 million servers and bartenders who receive tips nationwide, according to the Labor Department. The new rules would not be restricted to the restaurant industry.
A chorus of attorneys general from states opposing the proposed rule change submitted a letter Monday to the labor secretary, on the last day for public comment on the proposal.
"Restaurant servers and bartenders work hard for their tips," North Carolina Attorney General Josh Stein said in a statement accompanying the letter. "When customers leave a gratuity, they expect that money to go to the workers, not the owners. I oppose this U.S. Department of Labor rule because owners shouldn't pocket their servers' tips."
In the 14-page letter, the coalition of attorneys general from California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, New York, North Carolina, Pennsylvania, Oregon, Rhode Island, Washington, Virginia, Vermont, and the District of Columbia said the rule change "would harm low-wage tipped employees who can little afford to subsidize their employers."
When customers tip an employee, they expect their money to go to the employee, California Attorney General Xavier Becerra said in a statement. "Hardworking men and women, especially those who are paid close to the minimum wage, depend on every penny they've earned to feed their families, keep a roof over their heads, or advance their education or careers," Becerra said.
Not only have critics denounced the plan as one that would legalize wage theft, they also have accused President Donald Trump's administration of suppressing evidence supporting those allegations. The Labor Department did not release an economic analysis with its proposal.
The Labor Department's Office of Inspector General announced this week that it was undertaking an audit of the rule-making process used by the department's wage and hour division related to the proposal to rescind part of the tips regulations after a report by legal research service Bloomberg Law raised questions.
In December, Labor Department officials announced a proposed rule change that would roll back portions of a 2011 regulation from President Barack Obama's administration that blocked employers from collecting tips and distributing them to anyone other than the workers who customarily receive them.
Under the new proposal, employers could use workers' tips for most any purpose, as long as the workers who received the tips also were paid at least $7.25 an hour, the federal minimum wage.
The restaurant industry, which has lobbied against the Obama regulation for years, argues that rolling it back would make it so employers could share the tips of servers and bartenders with dishwashers, cooks and others who work in the "back of the house."
"We think it's unfair for a busboy who picks up dirty dishes to be able to get tips but for a dishwasher who cleans the dishes not to be allowed to share the tips," Angelo Amador, senior vice president and regulatory counsel at the National Restaurant Association, told The New York Times.
But the attorneys general argue nothing in the rule prevents employers from simply pocketing gratuities as additional profit.
In many restaurants, servers voluntarily "tip out" to cooks, dishwashers and other workers.
According to the Economic Policy Institute, a labor-oriented think tank based in Washington, the rule change could result in employers taking up to $5.8 billion of workers' earned tips, Stein said -- adding that more than 91,000 people in North Carolina work as waiters or bartenders.
The Labor Department's proposed rule change does not include workers who make less than the federal minimum wage and earn tips to supplement their pay. Under the Fair Labor Standards Act, employers are required to pay their employees the federal minimum wage, but they can meet that requirement by either paying the minimum wage or by paying at least $2.13 per hour while making up the difference with tips earned by the employee.
Information for this article was contributed by Andrew Khouri of the Los Angeles Times.
A Section on 02/08/2018