It doesn’t come as much of a surprise that an administration led by a career businessman who has appointed a succession of Wall Street grandees to top positions would prove hostile to labor regulations. But lack of surprise doesn’t make what the Trump administration is doing any less onerous. Most recently: rolling back a rule on shared tips in a way that could let restaurateurs and other business owners skim cash from gratuities earned by their workers. It’s an act of bureaucratic pettiness reminiscent of that Dr. Seuss scene in which the Grinch nips back down the chimney to snitch a crumb from beneath a mouse’s nose. You’re a mean one, Mr. Trump.
At issue are regulations adopted in 2011 under the Fair Labor Standards Act that effectively allowed tips to flow only to the employee who earned them or to a pool for workers who customarily receive tips. The new Department of Labor proposal would rescind portions of the 2011 rule and allow employers to collect and redistribute tips as they see fit.
The idea, at least in restaurants, is that wait staff, bartenders and others dealing directly with customers receive tips for services, but much of the work that shapes a customer’s experience — plating meals, for instance, or washing dishes — is done out of sight, and thus out of the diner’s mind. Those workers often earn minimum wage or a little more. By letting restaurant managers aggregate the servers’ tips, they can be shared more equitably with the folks working in the kitchen, goes the argument. Less for the waiter, more for the dishwasher. The rule would apply broadly to tipped workers in other settings, too — hairdressers, car washers, doormen.
But critics point out that the proposed regulations do not specify what the business owner must do with the aggregated tips — or require that they be redistributed at all. Restaurant owners who pay employees the full minimum wage would be free to use the cash to invest back in the business, make improvements, or just pocket the money themselves.
How big of a deal is this? Maddeningly, the Labor Department didn’t estimate the economic impact, as it is required to do (and a legal challenge on those grounds could well stop this). The department said that it lacked the data to compute how much money would be involved, though it did calculate that there are “up to 1,298,231 tipped workers in 206,770 full-service restaurants, and 40,095 drinking places” around the country. The left-leaning Economic Policy Institute helpfully crunched some numbers; it estimates, loosely, that restaurant owners could pocket $5.8 billion a year under the proposed change, or 16% of the estimated $36.4 billion in tips. The group did not estimate how much of the tips would get redistributed from servers to kitchen workers, but the amount of the transfer would likely be significant in an industry notable for low pay, long hours and existing problems with wage theft.
The proposal is yet another sad move by an administration that promised to look out for average Americans, but instead is going to lengths both great and minute to make their lives even more difficult.
Remember, congressional Republicans, cheered on by Trump, reversed a Labor Department ruling that allowed California and other states to create their own 401k-style retirement programs for low-income workers whose employers provided no such benefits. And the Trump-dominated National Labor Relations Board recently overturned an Obama-era ruling that franchise owners and their corporate umbrellas — think McDonald’s — should be considered joint employers, making it easier for workers to seek redress for wage theft and other grievances, and clarifying who exactly bears responsibility for negotiating union contracts.
It has similarly scrapped an Obama-era decision making it easier for small unions to organize in large work sites (think the fragrance workers in a department store), and the new general counsel is seeking referrals from regional NLRB officials of decisions “over the last eight years that overruled precedent and involved one or more dissents,” signaling his intent to undo more Obama-era decisions. These changes have all been done unilaterally, without seeking public comment, critics say.