White House Plan Giving Restaurant Owners More Control Over Tips Under Fire : The Salt Monday is the deadline for Americans to comment on the proposal. The Trump administration reportedly suppressed an analysis that found the plan could cost tipped workers billions of dollars a year.

White House Plan Giving Restaurant Owners More Control Over Tips Under Fire

  • Download
  • <iframe src="https://www.npr.org/player/embed/583461856/583461857" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

ARI SHAPIRO, HOST:

It's last call for public comment on a Trump administration proposal that would give bar and restaurant owners more control over the tips their workers make. The Labor Department asked for feedback and hundreds of thousands of people have given it. Many say they're opposed to a rule that would allow restaurant owners to redistribute tips to dishwashers or cooks or even pocket tips for themselves. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Julie Holmes was alarmed when she first heard about the administration's proposal. Holmes has worked as a waitress, and she knows how important tips can be. If the Labor Department succeeds in giving control of that money to restaurant owners, Holmes says, it'll drive more servers into poverty.

JULIE HOLMES: I think it's another example of corporate greed gone wrong. And it basically makes people feel as though they can't earn a living. Women especially - single mothers and people who are really out here working as hard as they can to try to provide are affected by this.

HORSLEY: Holmes is one of more than 300,000 people who've commented on the idea, which the administration first proposed back in December. Many of those comments have been negative.

HEIDI SHIERHOLZ: There's a lot of tipped workers out there. And people are really not happy about this.

HORSLEY: That's Heidi Shierholz, who served as chief economist of the Labor Department during the Obama administration. She says one group that likes the proposed rule is the restaurant industry. Kurt Huffman, who runs more than two dozen restaurants in Oregon, says it would be nice to have more control over tips, a major revenue stream that until now he's been unable to touch.

KURT HUFFMAN: There's 20 percent of what a business generates, we have no ability to impact at all, traditionally.

HORSLEY: Huffman says if he could, he would redirect some of those tips to lower-paid cooks and dishwashers. Many restaurants already require wait staff to share tips with busboys and hostesses. But they're not allowed to require such sharing with people who work in the kitchen.

HUFFMAN: I think all of us see this as a way to reallocate the tips a little bit more fairly to level out the wage inequity.

HORSLEY: But Shierholz, who now works for a left-leaning think tank, the Economic Policy Institute, says there's nothing in the proposed rule that would require tips to be shared with other workers. So long as an employer pays minimum wage, he or she could use tips to reward managers, make capital improvements or simply keep the money.

SHIERHOLZ: We estimate that nearly $6 billion will be taken from workers and pocketed by employers.

HORSLEY: Shierholz was surprised when the Labor Department issued its proposal without that kind of cost-benefit analysis, which is typically included. The department said at the time, it would be too speculative. But now a report from Bloomberg says the Labor Department did crunch the numbers and decided not to publish the results because they showed tip workers could lose billions of dollars a year. The department's inspector general is now investigating the reported omission.

And Democratic lawmakers like Mark Takano of California say it raises serious questions about the integrity of the rule-making process.

MARK TAKANO: It also fits within a pattern of a lack of transparency, starting with the president's own refusal to show his tax returns.

HORSLEY: A Labor Department spokesman said in a statement, officials do plan to include a cost-benefit analysis with their final decision on the tip rule. Julie Holmes, who weighed in with hundreds of thousands of others, says she hopes by that time public opinion will carry the day.

HOLMES: I really hope it does. I mean, maybe the powers that be can understand that, you know, these are real people being affected by this.

HORSLEY: For decades, before this proposal, the Labor Department had maintained that tips are the property of the workers who receive them. The restaurant industry has challenged that position, and the case could be decided by the Supreme Court. Scott Horsley, NPR News, Washington.

Copyright © 2018 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.