Who Owns Tips? If Trump’s Department of Labor Gets Its Way, Employers, Not Workers

Thea Bryan is a single mother putting herself through graduate school. She spends her days at an unpaid internship for her social work program. At nights, she bartends to support herself, earning most of her income through tips. Sometimes, the pay is lucrative. But around October, her work — and money — started to lag. “When business is slow, as it has been for me lately, I don’t get paid. The managers get paid, the kitchen staff gets paid, the dishwasher gets paid. I don’t,” Bryan said.

As it stands, the lack of customers has already had a profound effect on her life. But a new proposal from the Department of Labor could make things much worse for Bryan. Under the proposed rule, she might have to hand those tips — the basis of her income — over to her bosses. The new Department of Labor proposal says that employers who pay tipped workers a full minimum wage (as opposed to the subminimum wage for tipped workers) would be able to take ownership of the tips that customers leave for their servers. This would overturn decades of precedent that keeps those tips in the hands of the people in the line of service, like Bryan.

Bryan shared her story at a press briefing put on by Restaurant Opportunities Centers (ROC) United on December 12. “Why is there such an effort to keep people from making decent wages?” Bryan asked. “First they don’t want to pay a decent hourly wage if you get tips, now they want to take your tips if you make a decent hourly wage!”

Senator Jeff Merkley of Oregon and Rep. Keith Ellison of Minnesota joined Bryan at the press conference, both noting that the rule was another example of President Trump standing with the powerful against the interests of the people. One of those powerful groups? The National Restaurant Association, also known as “the other NRA.” Alongside the Department of Labor, the industry lobby is framing the proposed rule as an initiative to allow for tip pooling to end pay disparities between the front and back of the house.

What ROC United and other advocacy groups point out, though, is that there’s no provision to ensure that tips stay in the hands of workers and not their bosses. In fact, the language in the proposal suggests that employers could allocate tips to make capital improvements or lower menu prices, which they say has “potential benefits to employees and the economy overall.” Or a tip left for a server could go to the employer instead.

That transfer of money from workers up to their bosses is no small change. If the rule is enacted, the Economic Policy Institute says that employers would take $5.8 billion in tips from workers, an estimate they call conservative. The backdrop to this is an industry that’s already rife with wage theft, which makes worker advocates especially concerned.

For example, employers of tipped workers are among the worst offenders in minimum wage violations, especially due to the subminimum tipped wage. Employers can pay tipped workers $2.13 an hour as long as their tips bring them up to the full minimum wage. But enforcement is lax — and that’s something Bryan knows from experience. She says she’s gone two weeks without getting paid a minimum wage, and hasn’t been able to get her employer to make up the difference.

Wage theft is also already an issue with tips, as ROC United co-director Saru Jayaraman pointed out at the press briefing. ROC United has surveyed nearly 10,000 restaurant workers, Jayaraman said, and one in five of them reported that employers have taken a portion of their tips, even though that’s currently not legal.

The Department of Labor is already feeling the pressure against this rule. Originally, they had planned to allow comments for 30 days beginning on December 5th — right through the holiday season, one of the busiest times of the year for restaurant workers. But Jayaraman said tens of thousands of people submitted comments against the rule in the first three days alone. The agency eventually extended the deadline to 60 days after public pressure, including a letter from more than 40 House Democrats calling for more time.

The battle over tips is only adding to Bryan’s stress over wages, which she says makes her feel like a pressure cooker. “My son is 11 years old. I would like to know how much money I will be making any given month so I can enroll him in after school activities and maybe take him to the movies every once in a while, or pay my rent.” Right now, she says that’s not possible for her.

That’s why Bryan’s not limiting her advocacy to the fight over owning tips. She’s also active in the One Fair Wage campaign in Washington, D.C. which calls for an end to the subminimum wage for tipped workers. Bryan says she’d like to see people in the service industry get a livable minimum wage, just like any other worker would expect. “I’m a restaurant professional, and I deserve a professional wage.”