And yet, amid all that noise, something good happened. Moreover, it happened through a combination of old-fashioned investigative journalism, fact-based think-tank analysis, and compromise by high-ranking government officials. Chances are you missed it, so take a moment off from existential dread and appreciate this island of partial sanity. If nothing else, it’s a reminder that there’s a better way.
A few weeks ago, I posted an interview with Heidi Shierholz, senior economist at the Economic Policy Institute and a former chief economist at the Department of Labor. The topic of our interview was a potentially terrible new rule sought by the Trump administration that would allow employers to pocket workers’ tips. The rule, long sought by the National Restaurant Association, was sold as a tip-sharing arrangement with “back-of-the-house” workers, but the most important and unprecedented change in the law was rescinding the ban on employers taking workers’ tips.
The first I learned about this was from an article by Ben Penn, a journalist with Bloomberg Law, which revealed a key fact about the administration’s implementation process: It was suppressing internal analysis of the impact of the rule, findings that allegedly showed billions of dollars at risk of being transferred from the pockets of tipped workers to those of their employers.
Shierholz and the EPI team, who have done extensive work in this regulatory space, quickly crunched the numbers and came up with their own estimate of how much of the workforce’s tips employers might pocket for themselves: just under $6 billion, or 16 percent of the estimated annual $36 billion in tips earned by tipped workers, or “roughly $1,000 per tipped worker on average each year.” (To be clear, most employers don’t do this; Shierholz cites research that found about 12 percent of tipped workers had tips stolen by their employers or supervisors.)
The National Employment Law Project, a research and advocacy project that fights relentlessly for workers’ rights (disclosure: I chair NELP’s board), snapped into action to elevate the potential damage of the rule change, along with the administration’s suppression of inconvenient facts regarding the wage transfer. (Here are my comments from a press call NELP helped to organize.)
The pressure to retract the rule or at least come clean with the estimate of its impact continued to build, and during a hearing in early March, Labor Secretary Alexander Acosta was aggressively questioned about the missing analysis. He argued that he didn’t like the idea of managers taking tips, but he didn’t have the legal authority to write such a restriction into the rule.
That prompted Democrats, led by Sen. Patty Murray (D-Wash.) to negotiate with Acosta to include such prohibiting language in the omnibus spending bill passed last week.
And that’s just what happened. The final bill included language not just explicitly prohibiting employers from taking workers’ tips (neither owners, managers, nor supervisors can be in the tip pool). It also ramps up the punishment for violations.
NELP’s Judy Conti told the New York Times that the new legislation “protects workers from employers and managers skimming their tips and sets up conditions for better wage justice in restaurants and bars across the country.”
Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers, agreed. The legislation “represents a historic victory for restaurant workers,” she said. “The National Restaurant Association wanted to steal workers’ tips, but the workers said no — and they won. The fact that hundreds of thousands of workers stood up and said no to employers taking their tips, and that congressional leadership listened and acted, is a testament to the power of workers standing up together.”
In other words, even today, sometimes the good gals win.
Now, before you get too elated, some caveats. There was never any need for this change in the first place, as restaurants were, of course, free to set up all the tip-sharing arrangements they want, and many had done so. The new rule changes little in this regard, though it’s possible some employers/managers/supervisors will misinterpret it, willfully or otherwise, and steal tips.
Ensuring that this doesn’t occur, and imposing the now-harsher penalty on violators, calls for ramped-up regulatory oversight, a role of the Labor Department’s Wage and Hour Division (WHD). Not only is WHD under-resourced, but the Trump administration is perfectly capable of nudging it to stand down on this and related issues, such as wage theft and not paying minimum wages. To be clear, the career workers at WHD know their job and do it very well. Moreover, new work by Shierholz discusses an incentive embedded in the rule to transfer pay from tipped to untipped workers (employers reduce the pay of non-tipped workers and make up the difference with money from the tip pool).
So, vigilance is required.
Even so, the moral of the story is clear: Resistance is not futile! As we’ve begun to see in other areas, most notably gun control, it takes a lot of us syncing up our efforts and pushing as hard as we can. And even then, we won’t always win. But this time we did, and that just makes me want to fight even harder next time.