'Year-End Victory' for Restaurants May Not Please Servers

Labor Dept. says employers can mandate tipped workers share their tips
By Jenn Gidman,  Newser Staff
Posted Dec 24, 2020 8:02 AM CST
'Year-End Victory' for Restaurants May Not Please Servers
Labor Department's changes on tipping will please some workers, but maybe not others.   (Getty Images/Photobuff)

New changes to Labor Department rules are being called a "year-end victory" for the restaurant industry, per the National Restaurant Association—though servers who rely on tips to boost their sub-minimum-wage pay may not be giving it an enthusiastic thumbs-up. Fox Business reports on a revision made final Tuesday by the DOL that now gives employers the ability to mandate a "tip pool," in which tipped workers, such as waiters and bartenders, must hand over a portion of their tips to nontipped workers, including dishwashers and cooks. Advocates of the rule change, which will go into effect in February and vary by state, say it will help even out the pay disparities that exist between those employees who work the floor for tips and those who don't, putting an additional $109 million into back-of-house workers' pockets, per DOL estimates.

Restaurant Business Online notes that due to this current wage gap, it can be difficult to find back-of-house help. Servers, however, may grumble at now having to split their tips, and another Labor Department shift won't make them any happier: Per CBS News, a past limit on how much time tipped employees could spend doing nontipped work, such as helping to set up or clean up, has been nixed. Heidi Shierholz, policy director at the Economic Policy Institute nonprofit, says this could lead to big savings for restaurants, as servers are typically paid much less than workers who usually do those nontipped tasks—but tipped workers could lose out on up to $700 million a year due to this rule change, per EPI estimates last year. "You don't solve the low wages of the lowest paid workers by taking it out of the wages of the second-lowest paid workers," Shierholz tells CBS. "You pay them more." (Read more tipping stories.)

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