Short-Changing Tipped Workers: Another Trump Administration Attack on Working People
When you leave a tip, who do you expect to get it? The worker who served you, or their boss?
The worker, of course.
Yet a proposed rule from the Trump Administration will jeopardize the wages of millions of low-income workers and their families, opening up the door for employers to take hard-earned tips from their employees.
Across the country, millions of tipped workers labor in car washes, in nail and hair salons, at airports, and in hotels, bars, and restaurants. Across the country, about 2.5 million work as waiters and waitresses, including more than 90,000 in Illinois. Seven of the ten lowest paid occupations in the U.S. are restaurant occupations; just over half of restaurant workers are women, but almost two-thirds of tipped workers (and 71% of servers) are women.
Despite the crucial work they do, tipped workers are disproportionately likely to experience financial insecurity and poverty.
The federal minimum wage for tipped workers is just $2.13 an hour, and is very low even in states with their own, higher minimum wage. The poverty rate for all tipped workers in states with a tipped minimum wage above the federal floor (like Illinois) is about 13.5%, which is almost twice as high as the poverty rate for all workers in those states. Clearly, tips are extremely important for workers who collect them, making up most of their earnings.
The Trump Administration’s recent proposed rule on tipped income will devastate workers.
Last year the U.S. Department of Labor (DOL) announced its plan to repeal a 2011 rule that clarified that tips belong to the employee, not the employer. And in December, the DOL published proposed regulations to do just that.
If adopted, the proposed regulations would rescind the 2011 Obama Administration protections regarding tips and would allow employers to legally pocket the tips earned by the workers they employ. Although the proposed rule says that employers can distribute the tips to untipped employees such as cooks and dishwashers in restaurants, the proposed rule does not actually require employers to distribute the tips to any worker — as long as tipped workers earn the minimum wage, employers could legally pocket those tips. Based on reports of current, illegal wage theft of tips by employers, the Economic Policy Institute estimates that the proposed rule will allow employers to pocket $5.8 billion of workers’ tips, legalizing wage theft.
The idea that workers are not entitled to keep their tips not only undermines the spirit and purpose of giving a tip, it ensures all tipped workers would be relegated to earning no more than the minimum wage regardless of how hard they work and how many tips they earn. This will push even more working people into poverty. And, adding insult to injury, taking tips away from workers will make them even more vulnerable to sexual harassment, which is already widespread in the restaurant industry.
The Trump Administration’s proposed rule on tipped income is just its latest attack on workers.
Under the Obama Administration, protecting low-wage workers and improving economic upward mobility was a cornerstone to the DOL’s mission. However, the current administration has shown a disturbing disregard for the needs and concerns of workers. Since President Trump took office last January, the DOL has reversed many regulations that would protect the health and wages of millions of workers nationwide. Starting with the reversal of DOL’s position on raising the wage ceiling for workers to be eligible for overtime to proposing massive budget cuts for workforce development, the Trump Administration obviously isn’t done breaking down workplace protections.
The federal government plays a vital role in ensuring the health and financial security of all workers.
The DOL should be making rules that protect workers and keep them out of poverty instead of rigging the system to favor employers who display no interest in the welfare of their employees. The Trump Administration’s war on worker protections is threatening the livelihoods of working people and their families in this country.
We must stand up to employers’ greed and support the millions of workers who rely on tips to make ends meet.
Take action by submitting a public comment to DOL by February 5th.
