The Trump administration has started putting the pieces in place to revoke an Obama-era rule that bans tip-pooling — essentially, a restaurant-industry practice not unlike socialism where servers’ tips get collected by the house, then redistributed however owners see fit (meaning to themselves, even). The system obviously invites controversy, and has generally been one backed, unironically, by pro-business Republicans. Which explains why the Trump administration threatened to repeal the Obama ban months ago and, according to CBS News, has now officially taken the first steps. Its story says the Labor Department hasn’t publicly released details yet, but did send the White House a notice back on October 24 about a “pending” rule change that seeks to “rescind the current restrictions on tip pooling by employers that pay tipped employees the full minimum wage directly.”
Labor activists fear the change will give restaurateurs full control of workers’ tips. Obama’s old Labor Department solicitor tells CBS that rescinding the rule would create a “race to the bottom.” Activists argue that one in five restaurants already steals workers’ tips under the current regulations — she adds that this amounts to “a way of doing what they have been doing, but it becomes legal.”
Labor groups ding Obama for not doing more to push a $15 living wage, but his 2011 amendments to the Fair Labor Standards Act did draw a hard line in the sand on tips: First, it ruled that employees own them, not the restaurant. Second, it added that this applies even if the restaurateur tries to compensate by paying servers a full $7.25 minimum wage instead of the $2.13 tipped wage. Third, it said restaurants can’t pool tips and give them to non-tipped employees.
Federal courts have since disagreed about whether those changes were okay, which means tip-pooling could end up before the Supreme Court — that is, unless the Trump administration intercedes with a federal ruling beforehand. The restaurant industry, naturally, welcomes such a rule. The National Restaurant Association, its biggest lobby, tells NBC that this is because it supports equitable pay, that limiting tips just to servers “creates a disparity between the ‘front of the house’ and the ‘back of the house.’” But other industry groups have perhaps been more transparent. Like the Oregon Restaurant & Lodging Association, which called the Labor Department’s proposal “an absolute game changer,” since it would in part protect “our members from private lawsuits for the period the rule was purportedly in place.”
What scares labor activists anyway isn’t necessarily tips being split between the front and back of house. In fact, “That might be OK,” says the co-founder of ROC United, one of the groups fighting for a $15 wage. “This regulation goes beyond that. It says it’s possible for employers to walk away with the tips and not give them to anybody.”