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The omnibus federal spending bill signed into law in March contains a provision intended to protect workers’ tips from a proposed Department of Labor rule that allowed employers to pocket gratuities.

“We achieved an important victory for workers,” said U.S. Rep. Rosa DeLauro, D-Conn. “The deal prohibits employers from pocketing workers’ tips, including taking tips to pay managers and supervisors.”

President Trump’s Department of Labor had proposed a rule to make it legal for employers to take gratuities from tipped workers. Advocates of the rule, like the National Restaurant Association, positioned it as a way to improve wages for all, but there was nothing in the proposal requiring employers to redistribute the tips they collected.

The Economic Policy Institute, a D.C.-based nonprofit think tank, estimated that if the “tip stealing” rule had been finalized, tipped workers would lose almost $6 billion a year — almost ten times more than the $640 million the Labor Department concluded the rule would cost workers.

The EPI also said about 80 percent of that loss — $4.6 billion — would be taken from female workers, because women are more likely to work for tips than men and more likely to earn lower rages.

“Many women who work for tips already face harassment and discrimination at work, and this rule adds insult to injury,” EPI director of policy Heidi Shierholz had said of the Labor Department’s proposal.

Opponents of the rule also pointed out that without any requirement that employers distribute the tips they collected, “back of the house” or other non-tipped workers wouldn’t likely see any change in their take-home pay.

The EPI submitted comments against the rule in early February, along with the AFL-CIO, Civic Action, Good Jobs Nation, Jobs With Justice, National Employment Law Project, National Women’s Law Center, People’s Action and more.

 

Protests and lobbying win the day

Hundreds of thousands of individuals also registered opposition to the Trump administration’s proposal. About 350,000 restaurant workers, other tipped workers, employers and consumers submitted public comments and many testified on Capitol Hill.

Meanwhile, activists staged protests, including an action at the DOL headquarters in Washington, where demonstrators unfurled a banner from the top of the building. It read, “Trump, Don’t Steal Our Tips!”

“The National Restaurant Association wanted to steal workers’ tips, but the workers said no — and they won,” said Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers United. 

When DeLauro on March 6 introduced the Tip Income Protection Act, the focus shifted to lobbying for the legislation.

Christine Owens of the National Employment Law Project said, “We want to extend our deepest gratitude to members of Congress who were instrumental in this victory, including Reps. Rosa DeLauro and Katherine Clark, whose tough questioning of Labor Secretary Alex Acosta during an appropriations hearing revealed an opening for a possible bipartisan agreement; they quickly followed up by introducing legislation.”

Owens also acknowledged Democratic U.S. Sen. Patty Murray for negotiating this agreement and Sen. Chuck Schumer and House Minority Leader Nancy Pelosi for “getting it across the finish line.”

The compromise inserted into the spending bill says employers cannot keep employees’ tips. Tips can be redistributed to non-tipped workers, provided all employees earn at least the regular minimum wage in their jurisdiction rather than the lower minimum wage for tipped workers. And the tips cannot be shared with supervisors, managers and owners, which would have been allowed under the Labor Department rule.

The victory, said Owens, “belongs to all the restaurant servers, bartenders, car wash workers, valets, attendants, and all the other tipped workers in America who fought back when the Trump administration proposed its misguided tip-stealing rule.”

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