Today the Trump administration took their first major step towards allowing employers to legally take tips earned by the workers they employ. The Department of Labor released a proposed rule rescinding portions of its tip regulations, including current restrictions on “tip pooling”—which would mean that, for example, restaurants would be able to pool the tips servers receive and share them with untipped employees such as cooks and dishwashers. But, crucially, the rule doesn’t actually require that employers distribute pooled tips to workers. Under the administration’s proposed rule, as long as the tipped workers earn minimum wage, the employer can legally pocket those tips.
And what we know for sure is that, often, they will do just that. Recent research suggests that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year, and workers in restaurants and bars are much more likely to suffer minimum wage violations than workers in other industries. With that much illegal wage theft currently taking place, it seems obvious that when employers can legally pocket the tips earned by their employees, many will do so.
It is worth noting how deeply unusual it is that there are no actual estimates in the proposal of the amount of money that would be shifted from workers to employers as a result of the rule, even though data that researchers use all the time are available to produce them. The requirements that agencies must follow during the rulemaking process are very clear, and among them is that agencies must assess all quantifiable costs and benefits “to the fullest extent that these can be usefully estimated.” When there is uncertainty about a quantifiable cost or benefit, agencies typically do something like provide a range—they don’t forgo providing an estimate altogether. It is obvious why the department left out the required estimate: this rule is bad for workers, and any estimate would have made that crystal clear.
Make no mistake: as a result of this rule, workers will take home less, and their loss will be employers’ gain. And Trump’s DOL is willing to break the requirements of the rulemaking process to attempt to hide that fact.