Servers and other restaurant workers receiving tips may soon be required by their employer to share the extra cash with non-tipped, in-house staff such as dishwashers and chefs, according to a new regulation announced by the Labor Department on Tuesday.
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Under the new rule, employers are prohibited from keeping tips from their employees, regardless of whether the employer takes a tip credit under the Fair Labor Standards Act. Employers who illegally hold employee tips will be subject to civil penalties not exceeding $ 1,100.
Restaurant managers and supervisors are also prohibited from keeping employees’ tips or participating in a tips pool.
The regulation removes a 20% limit on the amount of time an employee for whom an employer takes out a tip credit can perform related tasks without a tip. The rule states that employers may use tips as part of the fulfillment of the minimum wage when an employee performs non-tipped tasks for a “reasonable time” before or after performing tipping duties.
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Cheryl Stanton, the Labor Department’s payroll and hourly administrator, said the new rule “gives employers clarity” and could increase wages for workers who have previously been “excluded from attending tip pools”.
In addition, she claimed that the recently allowed tip sharing can “reduce pay gaps among all workers that contribute to customer experience.”
The FLSA requires covered employers to pay their employees at least the current federal minimum wage of $ 7.25 per hour. Under federal law, tipped workers can be paid as little as $ 2.13 an hour, as long as they earn enough tips to match the federal minimum wage.
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Heidi Shierholz, director of policy at the Economic Policy Institute and an economist at the Labor Department under the Obama administration, told the Wall Street Journal that the move “will allow employers to change jobs from untyped workers.”
Shierholz also claims that the rule does not address wage inequality, adding that if the Trump administration wanted to raise wages for domestic workers, “they could have supported a minimum wage increase.”
The final rule, an amendment to the 2018 law on consolidated appropriations, will take effect in 60 days, according to the Labor Department.