Feb 25, 2018 3 min read

Anyone who has toiled in the restaurant industry can vouch for the fact that it is hard work, whether it is the hours spent standing or walking, the occasional customer who can be obnoxious, and the demands that come with quickly preparing an assembly line of meals. The pay is low, more often than not, and health insurance, paid vacation and other benefits are usually not part of the compensation package.

Tips that are left for waiters or waitresses in restaurants, as well as for hair stylists, doormen, and other service workers, can help them make ends meet, particularly since many make just the minimum wage. In some cases, workers can legally be paid below the minimum in the expectation tips will make up the difference.

A proposal from the Trump administration would potentially take the tips that are meant for servers and give them to their employers to control. In December, the Labor Department unveiled a plan that would allow employers to pool tips as long as their employees are all paid at least the federal minimum wage of $7.25 per hour. Proponents argue pooling the tips will allow other workers, such as dishwashers and cooks, to share in the bounty that is usually provided to servers.

That sounds laudable enough. None of these jobs are glamorous or well-rewarded. But the proposal would not set forth such a guarantee. Employers would have the right to take the tips customers leave for servers, and use them for whatever purpose they see fit, whether it is, in fact, giving them to behind-the-scenes workers, or using them to make upgrades to the store. Nothing would stop them from simply pocketing them.

The Labor Department did suggest allowing employers to keep tips and using them for other purposes, whether it’s physical improvements or pay boosts, would benefit workers. Officials in the department may well have a point.

But if these things are not mandated, and the tips simply go to boost profits, then it will be workers who will be shortchanged.

The Economic Policy Institute makes a point worth considering: “Evidence shows that even now, when employers are prohibited from pocketing tips, many still do. Research on workers in three large U.S. cities (Chicago, Los Angeles and New York) finds 12 percent of tipped workers had tips stolen by their employer or supervisor.

Further, recent research shows workers in restaurants and bars are much more likely to suffer minimum-wage violations – meaning they receive less than the applicable minimum wage – than workers in other industries. For tipped workers, some of these minimum-wage violations occur when an employer confiscates tips.

“With that much illegal tip theft taking place, it’s clear that when employers can legally pocket the tips earned by their employees, many will.”

Adding it all up, the Economic Policy Institute estimated almost $6 billion in tips would be taken from employees and given to employers under the proposal.

To put that in perspective, that’s about equal to the annual profits of McDonald’s.

American workers deserve better.