Last year, the National Restaurant Association filed a lawsuit against the federal Department of Labor (DOL). In the suit, National Restaurant Association et al v. U.S. Department of Labor et al, plaintiffs challenged the DOL’s stance on the application of federal tip-credit restrictions to companies that don’t take tip credits.
In 2011, under President Obama, the Labor Department made a rule that clarified that tips belong to the wait staff, bartenders and barbacks performing work. Current federal regulations forbid employers from making servers pool their tips with non-tipped employees who make hourly wages that are higher than the servers, such as managers, owners, dishwashers or cooks.
The lobbyists at the National Restaurant Association view this administration’s proposal to give a green light to additional tip-pooling as giving restaurant owners permission to do as they please with gratuities earned by the waitstaff. Theoretically, a disreputable restaurant owner could pad his or her pockets with servers’ tips.
While that may be a worst-case scenario, even viewed in the most altruistic light where you assume that the pooled tips can raise the pay rates of low-wage kitchen employees, it still could adversely affect the earning abilities of millions of waiters and waitresses across America.
Employers might raise the base pay of bartenders and servers from the low rate of $2.13 per hour to the minimum wage rate of $7.50. It sounds good on the surface, but the waitstaff could still be stiffed by losing out on the far more lucrative gratuities.
Why should waiters and bartenders be forced to subsidize the salaries of low-wage kitchen workers? Shouldn’t the restaurant owners bear the responsibility of paying their employees in the kitchen a living wage?
In the past, shady business owners have attempted end runs around the tax credit loopholes. Some who skimmed tips wound up paying settlements to plaintiffs that were in the mid-seven-figures.
There are many ways that unscrupulous employers take advantage of their workers. Regardless of the viability of the proposal and any related litigation, if you suspect that your employer has misclassified your position to avoid paying overtime or otherwise cheated you out of your earned wages, you may need to take legal action.
Source: National Restaurant Association, “Tip Pooling,” accessed Feb. 16, 2018