Is the Labor Department scheming to take away restaurant servers’ tips? That’s the message some labor advocates are sending in response to a proposed rule-making by the Trump administration that would permit kitchen staff in certain states to receive a portion of servers’ tips.
More than 300,000 comments were submitted on the rule; many were copy-and-paste statements generated by labor groups. But mixed among these comments were reflections of genuine anger from servers who were concerned about losing their tips. As a 17-year veteran of the service industry, I hear their concerns. I share them. But I also know that they’re based on a deep misunderstanding of what a tip pool is and why it can be necessary.
To understand this issue, you first need to understand how servers and bartenders get paid. In most states, we’re paid a base wage below the minimum wage, based on the recognition that we’re earning significantly more than the minimum wage when tips are included. (If we don’t, the restaurant owner is legally required to top us off so that we never make less than the minimum.) The difference between the full minimum wage and our base wage is called the “tip credit,” and it allows restaurants with narrow profit margins to properly staff and keep menu prices low for guests.
A few states have rejected this approach, including my home state of Minnesota. Here, servers and bartenders must be paid the full minimum wage in addition to their tips. This approach is harmful to the restaurant industry, and I’ve actively fought to change it where I work in Minneapolis. The evidence is on my side: In states that have passed a higher minimum wage without implementing a tip-credit, communities are seeing heavy restaurant-exit. Large shifts to counter service models are occurring, creating restaurants which employ fewer people who make less money due to higher labor costs.
Restaurants that are able to survive must pay their already highly-paid, tipped staff substantially more after the minimum wage rises. That means kitchen staff are left out from the prosperity in the front of the house, creating a larger gap in the wage disparity between servers and cooks.
Enter the Department of Labor’s tip-pooling rule, which decided to try to find a way to bridge that gap in these states by reversing a policy that didn’t allow back-of-house staff to receive tips.
The proposed department rule would only take effect in those states with a base wage for servers that is at or above the federal minimum wage of $7.25. (Generally, these are the same as areas without a tip credit.) Allowing our tips to be pooled would ultimately reduce income inequality since kitchen staff would now finally be able to receive a portion of tips made. Back-of-house staff work just as hard as anyone else, and they deserve to be compensated for it.
Why are so many people up in arms over this? Labor groups have successfully popularized the notion that the Department of Labor’s new tip-pooling regulations will cause restaurant owners to pocket all of our tips instead of redistributing them to the back-of-the-house. This assertion is both risible and insulting. It implies that servers and bartenders are helpless to control their own destinies. Why would any server willingly work at a restaurant where the rules of the road say the boss keeps all the tips? I don’t know a single server or bartender who would choose to work at such a restaurant.
More generally: If servers don’t want to work at a restaurant that pools tips, they’re free to go work at one that doesn’t.
The real motivation to oppose the Department of Labor’s tip-pooling rule is more self-interested. Labor unions dislike tipping and tip income, because no one wants to pay dues out of their cash tips at the end of the night. This is the reason groups like the Restaurant Opportunities Center have actively advocated for the elimination of America’s traditional system under which diners expect to leave substantial tips in exchange for wait service. These groups prefer a new standard where service staff earn less but earned it in a paycheck, because this would facilitate unionization in the industry.
To the extent that tip pooling would help preserve tipping culture in states without a tip credit, labor groups have every reason to oppose it, even to the detriment of the full-service staff they are so eager to represent.
The best fix to the wage gap between servers and cooks is to support a tip credit in states that don’t have one. I’m doing what I can to make this a reality in the Minneapolis-St. Paul metropolitan area, but the politics of it are tricky. And absent that change, the tip-pooling rule will provide relief for restaurants and employees.
Jennifer Schellenberg is a server in Minneapolis with over 17 years of experience in the industry, she is also a founding member of the Restaurant Workers of America.
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