The federal labor department is considering a proposal that would force some waiters and waitresses, bartenders, hairstylists and other tip earners to give their gratuities to their employers, and North Carolina Attorney General Josh Stein is not enthusiastic about the idea.
Stein joined a chorus of attorneys general from other states opposing the Trump administration’s proposed rule change.
“Restaurant servers and bartenders work hard for their tips,” Stein said in a statement accompanying the letter the attorneys general sent Monday to the labor secretary. “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 a 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.”
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Not only have critics denounced the plan as one that would legalize wage theft, they also have accused the Trump administration of suppressing evidence and analyses supporting those allegations.
Late Monday afternoon, the labor department’s Office of Inspector General announced that it was undertaking an audit of the rulemaking 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 Bloomberg Law raised questions. The Inspector General’s office shared a memo on Twitter.
In December, labor department officials announced a proposed rule change that would roll back portions of a 2011 Obama administration regulation that blocked employers from collecting tips and distributing them to anyone other than the workers who customarily receive them.
Under the new proposal, for which the public comment period ended on Monday, 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 the 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.