The federal government is changing the rules on how tipped workers are paid, to the extent that worker advocates say it will pull $ 700 million out of the pockets of waiters, bartenders, table porters and other service workers annually.
The Labor Department finalized a rule on Tuesday that allows employers to require employees who receive tips, such as waiters or bartenders, to share their tips with workers who do not receive tips, such as cooks and dishwashers.
The rule also removed an earlier requirement on how long tipped workers might be needed to work without tipping. Previously, the government limited the time that a tipped worker could spend on unpaid activities to 20% of his shift. Removing this limit allows employers to pay workers dramatically less, according to Heidi Shierholz, policy director at the left-wing Economic Policy Institute who worked in the Department of Labor during the Obama administration.
“This allows employers to make workers spend more time doing work without a tip while still receiving a salary below the minimum,” said Shierholz.
For workers who rely primarily on customer tips, work without a tip is part of the job. Servers and bartenders often help prepare a restaurant before opening it, or help clean up after the establishment closes and customers leave. The new rule will allow employers to transfer much more of this unpaid work to their lower-paid workforce, EPI said.
For example, instead of having three dishwashers on the team, a restaurant may decide to hire only one dishwasher and require all waiters to wash dishes periodically as part of their shift, EPI said. This would represent a big savings for the restaurant, which is obliged to pay dishwashers a minimum wage of $ 7.25, but can pay servers who receive tips as little as $ 2.13 in some states.
Over the course of a year, workers who received tips would lose more than $ 700 million under this new rule, EPI estimated last fall. That number has probably increased since the coronavirus pandemic, Shierholz noted. With the drastic reduction in indoor meals, many restaurants that managed to stay open started to work mainly without tips, such as preparing delivery orders.
Share and share the same way
DOL’s tip-sharing requirement could transfer $ 109 million from employees who received tips to their co-workers, according to the department’s analysis. In a press release, manager of wages and hours of work, Cheryl Stanton, said the new rule could increase the income of domestic workers, as well as “reduce wage disparities” among workers who deal with customers who receive tips and those who do not receive.
In many restaurants, employees who work in front of the house traditionally earn more than those who work in the back. Nationally, restaurant work remains among the lowest paid jobs. On average, waiters and waitresses earn only $ 26,600 a year, according to the Bureau of Labor Statistics, while dishwashers earn $ 24,400 and cooks, $ 27,550.
“You do not resolve the low wages of the lowest paid workers by discounting them from the wages of the second lowest workers. You pay them more, ”said EPI’s Shierholz.