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Consumer Confidential: Trump aims to reverse an Obama-era rule on restaurant tips

David Lazarus, Los Angeles Times on

Published in Business News

When it comes to restaurant tipping, the Trump administration apparently thinks socialism is best.

The Labor Department has notified the Office of Management and Budget that it intends to rescind an Obama-era rule preventing restaurant owners from pooling servers' tips with kitchen staff.

The rule specified that tips belong solely to the server. The Trump administration wants restaurant owners once again to be able to redistribute the wealth among non-tipped workers.

A Labor Department spokesman declined to elaborate on the agency's OMB filing, which offers no explanation for the proposed change.

But it's not hard to conclude the administration is responding to lobbying by the National Restaurant Assn., which favors pooled tips as a way to boost compensation for kitchen staff rather than paying cooks and dishwashers higher wages.

"You'd love to be able to pay everyone $30 an hour," said Angelo Amador, regulatory counsel for the association and executive director of its affiliated Restaurant Law Center.

"But you need to be able to make a profit," he told me. "If you can't make a profit, you're out of business and nobody has a job."

Congress amended the Fair Labor Standards Act in 1974 to allow employers to pay tipped workers less than federal minimum wage if the workers' gratuities made up the difference.

In 2010, a federal court ruled that if an employer pays tipped workers at least the federal minimum wage of $7.25 an hour, it can require that gratuities be shared among the entire staff. In effect, this meant such tips belonged to restaurant owners, not servers.

In response, the Labor Department decided in 2011 that tips are the property of the employee, and that "the employer is prohibited from using an employee's tips" to pool funds for kitchen staff.

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