Facing Outcry, Trump Backs Down from “Tip-Stealing Rule”

Restaurant servers, hotel workers, car-wash employees, and other tipped workers just won a big victory. As part of the $1.3 trillion spending package that President Trump signed on March 23, he backed down from a proposed federal rule letting bosses pocket workers’ tips.

Public Overwhelming Opposes “Tip-Stealing Rule.” While Trump’s Labor Department said the rule would let restaurants share servers’ tips with untipped workers, it would have let employers take the tips themselves.

  • As the Economic Policy Institute estimated, the rule would have cost servers and other tipped workers $5.6 billion, with women losing $4.6 billion.
  • Fighting back, workers and their allies submitted more than 200,000 public comments opposing the rule.

Trump Allies Buried the Bad News. The Labor Department’s economists found that workers “could lose out on billions of dollars in gratuities.”

  • Seeking to suppress these findings, Trump appointees at the White House and the Labor Department tried to change the research methods. When the study still showed workers losing, they tried to bury the study altogether.
  • At a hearing on March 6, Democratic Congresswomen Rosa DeLauro of Connecticut and Katherine Clark of Massachusetts grilled Labor Secretary Alexander Acosta about the suppressed study.
  • Stung by the public criticism, Acosta reached an agreement with Democratic Senator Patty Murray of Washington to scrap the rule.

Compromise Spotlights Need for “One Fair Wage.” Under the agreement, any restaurant setting up a tip pool must pay all its tipped workers the full federal minimum wage—$7.25 an hour.

  • That’s a big increase from the federal subminimum wage for tipped workers—only $2.13-an-hour.
  • This highlights the need for “one fair wage” for all workers. Seven states have eliminated the sub-minimum wage. Michigan and Washington, DC, will vote on the issue this year, while New York is considering the idea.