Restaurant customers: Do you want the tips you leave going to restaurant owners? The U.S. Department of Labor thinks it’s a good idea.
Amazingly, President Donald Trump’s Labor Department is proposing a rule that would allow restaurant owners to do what they want with the tips that guests leave for restaurant workers, including pay themselves more. In the past, this act has been the very definition of wage theft and a crime. I have no doubt that, given the opportunity, many restaurant owners would choose to pocket tip money, either a portion of it or all of it. Given the recent stories of sexual harassment emerging from our industry, it is clear that although we are the second-biggest and fastest-growing sector, we are way behind in how we treat our employees.
The background on this issue is that in 43 states, including my own state of Maine, employers are allowed to pay tipped workers a far lower minimum wage than other workers, because tips supposedly make up the difference. My fellow employers and I are obligated by law to ensure that tips bring all workers to the full minimum wage, but the Department of Labor has previously reported that in these 43 states, 84 percent of employers are in violation of the law — showing that wage theft is already rampant in our industry.
Seven states actually have what is referred to as “One Fair Wage,” meaning they do not allow employers to pay the subminimum wage to workers. In these seven states — Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington — employers enjoy lower turnover, higher sales and better ratings for their restaurants.
In these states, because employers must pay the full minimum wage, tipped workers have been able to share their tips with kitchen workers. However, there are also stronger protections against employers taking any portion of the tips, and all workers have the same or higher tips than in states with a subminimum wage.
Now, the U.S. Department of Labor is proposing that if an employer pays the full minimum wage anywhere in the country, it should be able to control how the tips are distributed, or keep them for itself. The department claims that this new rule would allow employers to share tips with the kitchen staff. But as we can see from the seven states that require employers to pay the full minimum wage, the law can enable tips to be shared with kitchen staff without employers being allowed to take or keep any portion of the tips.
It’s clear that what would be best for everyone — workers, consumers and employers like me — is One Fair Wage, the ability for workers to share their tips with all staffers in the restaurant — and strong protections that allow workers to keep their tips.
With One Fair Wage, many of the problems inherent in the two-tiered wage system go away — including sexual harassment from guests, jealousy from kitchen staff with regard to service staff’s tip income, wage instability for tipped workers, competition for better shifts and sections, and more — all to be replaced by a sense of teamwork, professionalism and working toward a common goal. One Fair Wage and tip sharing would move our industry in a very positive direction that, lucky for us, has already proven successful in the seven states that have had the One Fair Wage system for years.
How does a restaurant owner determine how tips are shared and who gets what? I favor an inclusive approach that can be customized to each restaurant or company. Business models vary widely from casual to fine dining, so customized math is needed to arrange equitable systems. Having operated both full-service and counter-service restaurants for over 30 years, I know tips are a hot-button topic within restaurants. For just that reason, they can also be a powerful motivator and team builder if a mutually created system is devised. Regardless, it is entirely possible to share tips with staff without making tips the property of owners.
The Labor Department’s strategy — to let owners do what they want with tip money — amounts to a money grab for the wealthy. I hardly imagine that customers would be happy that their tips could end up in the pockets of restaurant owners. Letting owners control tips is absurd. This is being proposed in the guise of giving owners the power to decide how tips are disbursed. Instead, the Department of Labor’s loophole will make restaurant workers, already among the lowest-paid workers in the country, impoverished instead of empowered.
Michael Landgarten is owner of Bob’s Clam Hut and Lil’s Cafe, both in Kittery.
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