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Trump Is About to Make Tip-Pooling Legal Again. Gratuities could be split between servers and cooks, or kept for the house

The proposed changes, first announced in July, roll back the Obama administration’s 2011 regulations that expressly prohibited the distribution of tips to anyone other than the front-of-house staff who earned them. Backers argue it’s a regulation that could go a long way towards erasing income inequality between back and front of the house. Others say it’s a recipe for a host of evils, ranging from tip-pocketing by management to unsustainably high labor costs.

Under the Obama administration’s 2011 regulations, tips are considered the property of the service-facing employee (waiters, bussers, bartenders), and therefore employers cannot require them to share their tips. “The waiter’s position has always been, tips are our property, and under Obama, that was the case,” says Marc Zimmerman, a hospitality labor and employment lawyer for the past 20 years and a partner at Michelman & Robinson.

The result has meant a stark income disparity between waiters and cooks. As restaurateur Danny Meyer argued in his 2010 book Setting the Table, tipped employees are making about 300 percent of what they were 31 years ago. During that same period, everyone in the kitchen — the dishwasher, non-tip-eligible employees — has seen their hourly income go up about 20 percent.

The inequity between front and back of the house has caused some operators, notably Meyer, to abandon tipping altogether. The practice has been the subject of much heated discussion in the industry. Some clever operators are sending cooks out into the dining room to run and serve food so that they can be considered “service-facing” and share in the tip pool. Others suggest the better fix for restaurant workers would be to instead split tips between back of house and front.

A big problem with the new regulations is that employers may now legally pocket tips. Under the traditional paradigm, an employer takes the tip credit, pays all of their “service-facing” employees $2.13 an hour plus tips, and pays cooks and dishwashers $7.25 an hour, no tips (the numbers would be different according to minimum wage laws state to state, but this is the general idea).

But if they decide to follow the DOL’s new rule, and they don’t take the tip credit, and instead pay minimum wage of $7.25 an hour to all their employees, then tips are no longer considered the property of the employee; they become property of the employer. That employer could split those tips between back and front of the house. Then again, the employer could also keep them all.

The National Restaurant Association, which has come out strongly in support of the Trump Administration’s proposed change, acknowledges this loophole, but has not asked the DOL to add a provision that would bar an employer from keeping an employee’s tips.

Indeed, wage theft, which includes suits for failure to pay overtime, improperly counting hours, and misappropriating tips, is a huge issue in the restaurant industry and the subject of many lawsuits. As some immigration advocates note, undocumented and immigrant workers are particularly vulnerable to wage theft, as they might not feel empowered to file complaints against their employers; the issue is rampant enough that one organization has developed an app that helps workers report incidences of theft.

The rationale in favor of Trump’s tip-sharing regulation rests on a big-picture concept of service. “Service comes from the entire restaurant,” says Dan Rafalin, managing partner at Avroko Hospitality Group, which owns and runs restaurants like Saxon and Parole and Genuine Roadside in New York City. “We believe that the cooks are part of the service experience and customer experience. We all come to work and we are in it together.”

For the next 30 days (until January 4, 2018) the DOL will accept public comments on the proposed regulation. “This allows for a virtual town hall open forum, for voices on both sides to argue their case,” explains Zimmerman. “Some proposed regulations get tweaked a bit after public comment and others go through as is."

(full article at link)

by Anonymousreply 3512/08/2017

Alternate source:

[quote]This week, Trump’s Labor Department proposed rescinding an Obama-era rule that made the logical point that tips are the property of the servers and cannot be taken by the restaurant owner.

[quote]The administration’s proposal would allow restaurant owners who pay their wait staff as little as $7.25 per hour to collect all the tips left by patrons and do whatever they want with them—regardless of what diners intended.

[quote]Restaurant owners could even keep all the tips for themselves, without telling diners.

[quote]Coming on the heels of the massive tax bills recently passed by the House and Senate, this “reverse Robin Hood” scheme—which will take money out of the pockets of low-wage workers and give it to business owners–is just one more example of “trickle-down” economic policy masquerading as pro-worker reform.

[quote]Servers in restaurants are among the lowest-paid workers in our economy. The median hourly wage for waiters and waitresses was less than $10 per hour in 2015, according to the Bureau of Labor Statistics. They are hardly the kind of workers who should be subsidizing the profits of their bosses.

[quote]But the National Restaurant Association—the “other NRA”—lobbied for this result. The only question now is whether Labor Secretary Alex Acosta will go along with this swindle, or whether he will give the public enough information to have a fair chance to weigh in.

[quote]This is a bad policy that the administration is trying to hide behind a very bad process. Despite the fact that the law requires it, the Labor Department’s proposal includes no estimate of how much money in tips will be transferred from servers to restaurant owners—many of which are big corporations, not mom and pop—as a result of the rule. Instead of providing an estimate, the proposal provides numerous excuses for hiding the rule’s real impact from the public.

[quote]First, DOL claims that it can’t be exactly sure how restaurant owners will implement the rule—which is true, but no excuse for not trying. Every rule has uncertainty baked in—that’s why the accompanying economic analyses are called “estimates.”

[quote]Second, while DOL acknowledges that employers may keep some of the tips “to make capital improvements,” cut costs or increase work hours (speculation it spins as a win for workers even while admitting some tipped workers will lose pay), it also suggests restaurant owners may redistribute the tips to “back of the house” employees—dishwashers, cooks, and others who don’t interact with diners.

[quote]DOL may be partly right—we don’t know if some of that transfer will happen—but that possibility doesn’t excuse DOL from making a best effort to estimate how much.

[quote]Sadly, some restaurant owners already routinely steal tips from servers, even without the blessing of the government. If the proposed rule takes effect, even more restaurant owners would feel they have a blank check to siphon tips away.

[quote]Considering that food service workers earn tens of billions of dollars in tips each year, it’s not impossible that restaurant owners could end up skimming hundreds of millions or even billions of dollars each year from servers. The results could ripple across the economy, hurting families and local businesses and placing new demands on social service programs.

[quote]The implications of this potential rule change are too great to ignore, either within the administration or among workers and consumers.

by Anonymousreply 112/07/2017

Waitstaff are paid below minimum wage because of tipping. Cooks/kitchen workers, are NOT paid below minimum wage. So there's no reason to share tips between waitstaff and kitchen

by Anonymousreply 212/07/2017

Does Trump own the restaurants in his hotel? I’m assuming no for the most part.

Does this extend to hotel staff who offer room service? Or are they contracted via employment agencies?

Sorry for the somewhat dumb questions, but I’ve never worked in the food and beverage industry.

by Anonymousreply 312/07/2017

Everyday this man shows his voters what a greedy piece of shit he is, and everyday, they dig in their heels and continue supporting him. Even while he literally steals money off their tables.

Though I’ve never works in D & B, I’m assuming that the tips for the waitstaff at his golf courses are pretty decent.

by Anonymousreply 412/07/2017

Once again, Trump will benefit financially from this. Sucks if you are a service worker relying on tips, but I guess this is why you've got to go out and vote.

by Anonymousreply 512/07/2017

I worked in a fine dining restaurant for a year. I made $3.36 an hour plus tips. My tips were my own... once management gave 10% of them to the bartenders and 20% of them to support staff (food runners, busers, etc.). Then I am taxed on my tips. So that $18 a nice couple left for me on a $100 meal actually ends up being less than $10 in my pocket once it's all said and done.

Back-of-house makes proper minimum wage. They don't need FOH tip sharing.

This is fucked up.

I'm so glad I don't work in the service industry anymore.

by Anonymousreply 612/07/2017

Wait til there aren't enough Mexicans or Central Americans coming into the country and see how many Americans ae willing to work for less than minimum wage and no tips.

by Anonymousreply 712/07/2017

This is really fucked up!!!!!!!! cooks don't even serve people! Servers have to look attractive etc, they spend more money on trying to look the part, servers should get paid more!

by Anonymousreply 812/07/2017

will this affect bartenders?

by Anonymousreply 912/07/2017

This man is such a flagrantly disgusting piece of shit. I’m appalled by him, but not at all surprised.

Good luck to all of the deplorables working at Denny’s, and the like, in Middle America. Maybe than can all go and work at those financially burgeoning coal mines with those EXCELLENT health benefits packages and generous retirement plans.

by Anonymousreply 1012/07/2017

kept for the house? that is just fucked up!!!

by Anonymousreply 1112/07/2017

R11, you can bet your 15% tip that these new policies will be enacted in all Trump owned business, and that ALL the tips will be kept by the house. Guaranteed.

by Anonymousreply 1212/07/2017

Keep the working class angry and divided Donald.

by Anonymousreply 1312/07/2017

I like this.

by Anonymousreply 1412/07/2017

Me too, R14

by Anonymousreply 1512/07/2017

Suddenly not looking so crazy.

by Anonymousreply 1612/07/2017

In Hotels, as far as I know, the workers are unionized (in nyc they are), even if they are working in the restaurants. they get paid by the hour and get tips as well.

by Anonymousreply 1712/07/2017

R17, how much do they get an hour? Is it below minimum wage?

by Anonymousreply 1812/07/2017

R18, I am not sure. I met someone who worked in a hotel once and he was getting paid at least 20 bucks an hour. they are in the union, they are well paid.

by Anonymousreply 1912/07/2017

I guess this means I need to start carrying cash again so I can out it directly in the server’s hands.

by Anonymousreply 2012/08/2017

R20: Any restaurant with smart managers wants to protect the company from shady tax practices. Where I worked, the floor manager would look at your total sales, cash turn-in, cash tips, and credit card tips before you were dismissed for the day. It doesn't take a math genius to see if you misrepresented your cash tips on your report, and they would question you if tips (cash and charge) didn't come close to 15%. It was also to protect the staff that you tip out, because if I didn't report that nice $50 the old couple left me, than that was $5 the bartenders didn't get and $10 the support staff didn't get.

tl,dr: Management will find out (and report) your cash tips anyway, so tipping in cash didn't save me anything on taxes.

by Anonymousreply 2112/08/2017

PS If you told management, "Yeah, one table left without tipping," they would go to the computer, see which table it was and then ask why. They had eyes like hawks and could remember every dish ordered by every table throughout the entire shift. And if you said someone left without tipping, they would review your service with them to find out if you did something to upset them and cause them not to tip.

by Anonymousreply 2212/08/2017

Trump wants his greedy, little hands into everything.

by Anonymousreply 2312/08/2017

I imagine if consumers know that their nice wait staff ain't keeping the tip, but management / owners are, tipping may be a thing of the past. If I'm shelling out 100 bucks for dinner I am not gonna offer up 15-20 bucks additional for the owner to keep.

by Anonymousreply 2412/08/2017

Wasn’t this tipping practice part of the scandal surrounding Jessica Biel’s restaurant, Fudge?

by Anonymousreply 2512/08/2017

[quote]Waitstaff are paid below minimum wage because of tipping.

Wrong, waitstaff ALWAYS get minimum wage. If they fail to make enough tips to bring their weekly earnings up to minimum the owners have to make it up.

by Anonymousreply 2612/08/2017

[quote]I met someone who worked in a hotel once and he was getting paid at least 20 bucks an hour. they are in the union, they are well paid.

Probably in California, or he was including the tips in his average wage.

by Anonymousreply 2712/08/2017

[quote]So that $18 a nice couple left for me on a $100 meal actually ends up being less than $10 in my pocket once it's all said and done.

But that $18 was not left FOR YOU, it was left for all the employees.

Properly done tip pools may be good or bad but it depends on the type of dining establishment. The higher class, the less likely it's needed. But it's nice to pool everyone's tips and divide it because if someone works hard and gets stiffed (and it happens to everyone eventually), you are not out as much.

It's the same principle we used with incentives where we had a multiplier, that if your group all made their goals, you got more, if one in the group failed to do this, you got your individual bonus but not multiplied, meaning it helped encourage workers to HELP and WORK with each other.

by Anonymousreply 2812/08/2017

"... and everyday, they dig in their heels and continue supporting him"

No, the Russian hackers are taking the polls. People are turning against him in droves.

I doubt if there will be any more pep rallies.

by Anonymousreply 2912/08/2017

R28, the problem is too many people regard tipping as their chance to play judge jury and executioner, as opposed to compensation for labor. They tip according to their highly subjective determination of who "deserves" it.

Tipping is bullshit. Eliminate it and pay every worker a proper wage.

I wonder how many deplorables will start parroting the line that Trump is a hero for letting management steal from their workers because freedom.

by Anonymousreply 3012/08/2017

I guess because tRumpty-Dumpty eats at McDonalds...which, I understand only through observations from afar, generally is a "prix fixe" menu without gratuities--he doesn't care about this issue. Or anything. Or anyone other than his fat, bloated, lousy, bigoted, pasty, nasty, hateful, odious, pawing, skanky, slaggy self.

by Anonymousreply 3112/08/2017

R24, but customers won't know. Business are not required to state whether they pool tips. If the rationale behind this was legit, they would be required to alert customers exactly how tips are distributed, if at all. But that would undermine tipping because too many customers are less interested in making sure service providers are fairly compensated than they are deciding whether this particular server is worthy of a tip. And of course businesses that keep tips risk losing completely the customers who do care.

by Anonymousreply 3212/08/2017

It doesn't make sense that Trump would want owners to steal servers/waitstaff gratuities.

As a hotelier, he knows in a five star hotel excellent service is everything, And regardless of how much you hate him, the Trump owned properties(not the licensed ones) are pretty highly rated with a lot of repeat business. So making the service people angry would be the stupidest, most self defeating move imaginable. Would it really be worth a few extra dollars per activity if in turn you cause your employees to hate you and the property itself? Just because he is hated does not mean he has no business sense. He may be considered a failure here, but he is thought to have good instincts for running the hotels and clubs.

by Anonymousreply 3312/08/2017

If this actually becomes a law, I'll leave $2.00 on the table then discreetly give the server a proper tip

by Anonymousreply 3412/08/2017

wait. so do you think this only applies to credit card tips? can the server still keep her cash tips? in a small place. so many of my friends are waitresses and bartenders. I hope this doesn't pass. it would suck so bad. it's not fair that the biz owners gets to keep it. they already save so much money by hiring illegals in the kitchen, porters etc. fucked up!

by Anonymousreply 3512/08/2017
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