What do you think of the proposed federal rule that would allow employers that pay workers the federal minimum wage ($7.25 per hour) to pocket tips for whatever purpose they want?

LOCAL 1 PERCENT meal and beverage tax collection for July declined 1.6 percent year over year, at least in part due to an inflated tax collection in East Greenwich due to an audit recovery in July 2016. / BLOOMBERG FILE PHOTO/LUKE MACGREGOR
A PROPOSED FEDERAL RULE would allow employers to collect all tips earned by staff if the workers are paid the minimum wage, upsetting the longstanding tradition of wait staff keeping all the tips they earn. / BLOOMBERG FILE PHOTO/LUKE MACGREGOR

R.I. Attorney General Peter F. Kilmartin has joined 16 other state attorneys general in filing a letter that opposes a proposed U.S. Department of Labor rule that would allow employers to pocket tips earned by employees who are paid the federal minimum wage. This would upend longstanding norms that allow tipped employees, such as wait staff in a restaurant, to keep all the tips they earn. The Economic Policy Institute has calculated that if this rule is implemented, it could take up to $5.8 billion out of the pockets of workers and give them to employers.

Some argue that this change will allow employers to distribute tips to staff who are not visible to the public (and thus are not tipped). But even a small re-distribution of tips would have a significant impact on the earnings of tipped staff. Does this sound like a good idea to you?

What do you think of the proposed federal rule that would allow employers that pay workers the federal minimum wage ($7.25 per hour) to pocket tips for whatever purpose they want?

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2 COMMENTS

  1. While Charles’ suggestion may seem equitable on the surface, it would remove the incentive for good customer service. Those who provide excellent customer service should be rewarded with larger tips; those who “phone it in” shouldn’t receive the same compensation.