Employers may be able to keep workers’ tips under proposed labor rule


The five Democrats in the state’s congressional delegation are irate about a proposed Department of Labor rule that they say could allow employers to steal employees’ tips.

The outcry centers on the Trump Administration’s December 2017 decision to undo a 2011 rule that codified the idea that workers’ tips were their own.

The Trump Administration says the rules — aimed at restaurants that pay minimum wage — aren’t designed to allow managers to pocket their employees’ tips; but instead are aimed at allowing — but not requiring — “back–of–house” such as cooks or those who bus tables, to also receive a fair share of tips.

RELATED: Senate protests tip rule, says it’s ‘stealing’

“Both front–of–house and back–of–house employees contribute to the overall customer experience — yet the current rule bars sharing any tips with back-of-house employees in establishments that pay the minimum wage, contributing to wage disparities among employees,” said a Department of Labor spokesperson.

The Labor spokesperson disputed the notion that the rule will result in employers pocketing employee tips.

“Employers who keep their employees’ tips will be unlikely to retain the employees they need to serve customers,” the spokesperson said. “Moreover, taking tips inherently undermines the incentive system that rewards employees for performing excellent customer service, as well as the incentive to maximize the number of customers served… The idea that this proposal is about employers keeping tips defies common sense.”

But that explanation has not satisfied Democrats, who say it could result in employers pocketing billions of dollars from workers. A study by the left-leaning Economic Policy Institute found that the rule would cost tipped U.S. workers $5.8 billion a year, including $224 million for tipped workers in Ohio. That study found that an estimated 16.1 percent of all tips would be pocketed by employer. Tipped workers nationally earn a total of $36.4 billion annually.

Ohio currently can pay workers $4.15 an hour if they earn tips, but employees are permitted to keep all of the tips they earn. According to Policy Matters Ohio, employers are required to pay non-tipped workers at least $8.30 an hour - the Ohio minimum wage. Under Ohio’s law, employers are required to provide tipped workers with $8.30 an hour if they do not get enough in tips to make the minimum wage.

Michael Shields, a researcher for the left-leaning Policy Matters Ohio, said while it’s possible employers may share some tips with back–of–house employees, it’d be likely they’d use those tips to offset wages rather than increase them. That’s because there simply isn’t enough demand for back–of–house workers to require such workers be paid more, he said.

He said the proposal contains no requirement that business owners who confiscate tips distribute them among workers at all, they say.

“They call it the ‘tip–sharing rule,’ but we’re calling it a ‘tip–theft rule,’ because it allows employers to seize employees’ tips,” he said.

On Thursday, Sen. Sherrod Brown signed onto a letter to Secretary of Labor Alexander Acosta, that criticized the rule, saying it “would take money out of the pockets of low-wage workers.”

They cited news reports that Labor disregarded studies showing up the impact on workers, saying that Labor “covered up” reports indicating how the rule would hurt workers. The letter was signed by 22 other Democrats and Sen. Bernie Sanders, I-Vermont.

Separately, Ohio’s four Democratic House members — Reps. Joyce Beatty of Jefferson Township, Marcy Kaptur of Toledo, Tim Ryan of Niles and Marcia Fudge of Cleveland — issued a joint statement saying they were “extremely concerned” about reports that the Department hid studies critical of the rule.

“The way the rule is currently worded does nothing to protect the hard-earned pay from workers across Ohio and our Nation, in fact, it takes us backward,” they said. “The U.S. government, especially the Department of Labor, should stand on the side of our workers, not help greedy companies reach into their pockets for their hard-earned wages. We urge this Administration to scrap this rule and go back to the drawing board.”



Reader Comments ...


Next Up in Politics

Lawsuit filed against bureau once headed by Cordray day after Dayton debate
Lawsuit filed against bureau once headed by Cordray day after Dayton debate

In a move which could impact the governor’s race between Republican Mike DeWine and Democrat Richard Cordray, two employees of the U.S. Consumer Financial Protection Bureau have charged they were discriminated against by officials of the bureau once headed by Cordray. The lawsuit charges that the consumer bureau “maintains a biased culture...
Watch the full Ohio governor’s debate in Dayton
Watch the full Ohio governor’s debate in Dayton

The first Ohio governor’s debate, held Sept. 19 at the University of Dayton, featured a fiery face-off between candidates Mike DeWine and Richard Cordray.  You can watch the full debate in the video above, or you can watch it on your streaming device (like Roku, Amazon Fire or Apple TV).
Highlights from first Ohio Governor’s Debate in Dayton
Highlights from first Ohio Governor’s Debate in Dayton

Democrat Richard Cordray and Republican Mike DeWine debated for one hour at the University of Dayton, exchanging barbs — about each others records as state attorney general — and ideas — about drugs, the opioid crisis and state support for Ohio’s urban core. The Wednesday night event marked the first debate for the major-party...
How people are reacting to the first governor debate on Twitter
How people are reacting to the first governor debate on Twitter

The governor debate in Dayton Wednesday night was a hot topic on Twitter. At one point, #OHgovdebate was trending nationally. Here’s a look at what some had to say about the testy debate between Republican Mike DeWine and Democrat Richard Cordray:
Green Party candidate spends debate on Dayton sidewalk
Green Party candidate spends debate on Dayton sidewalk

As Democrat Richard Cordray and Republican Mike DeWine prepared to debate face-to-face Wednesday, people protesting the policies of both candidates for Ohio governor also showed up divided on the issues, including who’s even allowed to debate.. Constance Gadell-Newton, the Green Party candidate for governor, was only to be seen or heard from...
More Stories