If the Trump administration has its way, the tip you leave your waiter or waitress could end up in the pocket of the restaurant owner instead of the person who served you.
This week, Trump’s Labor Department proposed rescinding an Obama-era rule that made the logical point that tips are the property of the servers and cannot be taken by the restaurant owner.
The administration’s proposal would allow restaurant owners who pay their wait staff as little as $7.25 per hour to collect all the tips left by patrons and do whatever they want with them—regardless of what diners intended.
Restaurant owners could even keep all the tips for themselves, without telling diners.
Coming on the heels of the massive tax bills recently passed by the House and Senate, this “reverse Robin Hood” scheme—which will take money out of the pockets of low-wage workers and give it to business owners–is just one more example of “trickle-down” economic policy masquerading as pro-worker reform.
Like the tax bills, the DOL proposal sets the table to transfer income and wealth from those least able to afford it to corporations and the very wealthy.
Servers in restaurants are among the lowest-paid workers in our economy. The median hourly wage for waiters and waitresses was less than $10 per hour in 2015, according to the Bureau of Labor Statistics. They are hardly the kind of workers who should be subsidizing the profits of their bosses.
But the National Restaurant Association—the “other NRA”—lobbied for this result. The only question now is whether Labor Secretary Alex Acosta will go along with this swindle, or whether he will give the public enough information to have a fair chance to weigh in.
This is a bad policy that the administration is trying to hide behind a very bad process. Despite the fact that the law requires it, the Labor Department’s proposal includes no estimate of how much money in tips will be transferred from servers to restaurant owners—many of which are big corporations, not mom and pop—as a result of the rule. Instead of providing an estimate, the proposal provides numerous excuses for hiding the rule’s real impact from the public.
First, DOL claims that it can’t be exactly sure how restaurant owners will implement the rule—which is true, but no excuse for not trying. Every rule has uncertainty baked in—that’s why the accompanying economic analyses are called “estimates.”
The public is entitled to understand the relative magnitude of the changes being proposed so it can comment on the proposal in a meaningful way. But so far, the public has been left in the dark.
Second, while DOL acknowledges that employers may keep some of the tips “to make capital improvements,” cut costs or increase work hours (speculation it spins as a win for workers even while admitting some tipped workers will lose pay), it also suggests restaurant owners may redistribute the tips to “back of the house” employees—dishwashers, cooks, and others who don’t interact with diners.
DOL may be partly right—we don’t know if some of that transfer will happen—but that possibility doesn’t excuse DOL from making a best effort to estimate how much.
Sadly, some restaurant owners already routinely steal tips from servers, even without the blessing of the government. If the proposed rule takes effect, even more restaurant owners would feel they have a blank check to siphon tips away.
So, why is the Trump administration skirting the law and dodging the numbers?
It’s especially puzzling given that Secretary Acosta has written eloquently on the need to follow the law and established procedures when repealing regulations. Likewise, the head of the White House agency that reviewed this rule, OIRA Administrator Neomi Rao, expressly testified at her Senate confirmation hearing that this kind of cost-benefit analysis is important even in deregulatory actions.
If we take them at their word, Secretary Acosta and Administrator Rao have no choice but to withdraw this proposal and reissue it—if at all—with a good-faith economic analysis. Otherwise, they’re sending a signal that they don’t want you to understand the stakes here.
Considering that food service workers earn tens of billions of dollars in tips each year, it’s not impossible that restaurant owners could end up skimming hundreds of millions or even billions of dollars each year from servers. The results could ripple across the economy, hurting families and local businesses and placing new demands on social service programs.
The implications of this potential rule change are too great to ignore, either within the administration or among workers and consumers.
Restaurant customers shouldn’t allow the Trump administration to make them complicit in stealing from their servers to pad the pockets of the owners. This proposal can’t go into effect until the public has a chance to comment on it.
Before the next time you go out to dinner, please take a minute to tell Secretary Acosta, Administrator Rao and President Trump: I want my tips to go to the person who worked hard to serve me, not to the restaurant owner.
Sharon Block is Executive Director of the Labor and Worklife Program at Harvard Law School. She was Counselor to Secretary of Labor Tom Perez and led the policy office, among other positions at the Labor Department and the White House during the Obama Administration.
Christine Owens is the Executive Director at the National Employment Law Project.