DOL’s Proposed Tip-Sharing Rule Sparks Heated Debate

Back-of-the-house workers, such as cooks, would be able to share in tip pools

Lisa Nagele-Piazza, J.D., SHRM-SCP By Lisa Nagele-Piazza, J.D., SHRM-SCP December 13, 2017
DOL’s Proposed Tip-Sharing Rule Sparks Heated Debate

The U.S Department of Labor (DOL) published a notice of proposed rulemaking on Dec. 5 that would allow "back-of-the-house" restaurant workers—such as cooks and dishwashers—and other nontipped hospitality workers to share in gratuities under the Fair Labor Standards Act (FLSA). Although restaurateurs and business groups have supported the proposal, Democratic lawmakers and worker-advocacy groups say that the rule would let employers steal wages from tipped employees.

We've rounded up the latest news on how the rule might affect the workplace. Here are SHRM Online resources and news articles from other trusted media outlets.

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

Eligible Employers Must Pay Full Minimum Wage

Currently, restaurateurs can require "front-of-the-house" staff who customarily receive tips—such as servers, bartenders and bussers—to pool their tips. The new rule would also allow back-of-the-house staff to share in tip pools as long as the employer pays participants the full minimum wage (instead of taking a tip credit) and the applicable state law doesn't prohibit such tip-pool arrangements.

(SHRM Online)

Democrats, Worker Advocates Speak Out Against Rule

Critics of the Trump administration's proposed rule say that it goes further than just allowing employers to include nontipped workers in the tip pool. They say employers could do whatever they want with the tips—they could keep a portion for restaurant improvements or share them with salaried managers. On Dec. 12, Sen. Jeff Merkley, D-Ore., and Rep. Keith Ellison, D-Minn., joined worker advocates in a press conference on Capitol Hill to protest the rule. The Economic Policy Institute has tweeted against the proposed rule. 

DOL Extends Comment Period

The DOL initially gave the public until Jan. 4 to submit comments either supporting or raising concerns about the proposed rule. On Dec. 12, however, the department posted on its website that it will extend the comment period an extra 30 days. More than 40 Democrats in the U.S. House of Representatives had signed a letter asking Secretary of Labor Alexander Acosta to extend the comment period. They said the DOL didn't provide a quantitative analysis of the costs and benefits of the rule change and that extra time is needed for those who will be affected by the rule to provide meaningful comments.

(The Hill)

Restaurant Groups Say Rule Would Promote Wage Equity

Restaurateurs and business groups that support tip sharing with back-of-the-house workers argue that the proposed rule will help employers remedy the income disparity between servers and cooks. "I don't think it's fair that waiters take home such significantly huge salaries that the kitchen does not," said Sara Jenkins, chef and owner of Porsena restaurant in New York City's East Village. "If I could share tips between front and back of house, even if I had to pay full minimum wage, I would do it."


Rule Would Undo Existing Regulations

The Trump Administration's proposal would nullify the DOL's 2011 regulations that made pooling tips with back-of-the-house employees unlawful, regardless of whether the employer took a tip credit or paid workers the standard minimum wage. Federal courts have disagreed as to whether the DOL exceeded its authority when it issued the 2011 rule and the Supreme Court has been asked to weigh in. The department's new position, if finalized, would make the high-court petition unnecessary.

(SHRM Online)


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