Labor Dept. Could Change System for Tipping at Restaurants

A new Department of Labor proposal would change the system for tipping workers in the service industry, such as at restaurants.

(Published Tuesday, Jan. 2, 2018)

A new Department of Labor proposal would change the system for tipping workers in the service industry, such as at restaurants.

The proposed change to an Obama administration regulation would allow restaurants to pool all tips only on the condition that they pay their servers the minimum wage: $7.25 an hour.

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The idea is that the business would then share the pooled tips with all their employees, including cooks and dishwashers. Currently, restaurants are prohibited from pooling workers’ tips.

Some worker advocates worry, though, that this would mean no federal protection from employers who decide not to share the tips and instead keep a hefty portion.

According to the Bureau of Labor Statistics, the median hourly wage for a restaurant server, counting tips, in 2016 was $9.61.

At Mama’s Daughter’s Diner on Irving Boulevard in Dallas, the breakfast crowd on a recent morning was split on the proposed change.

“If that’s going to be part of a new plan, a new strategy for waiters and waitresses I think that’s a great idea,” said Richard Martinez. “As long as there is not some minimum amount that the house is going to keep, regardless of how busy it gets.”

One table over, Charles Lohr — who said he eats out at restaurants for every single meal and pays thousands of dollars in tips every year — was very opposed to the change.

“A server’s income often can be 30 or 40 percent based on tips. That is a significant difference. I don’t believe that the per hour increase in her wage will make up the difference,” Lohr said.

Kevin Bradley, who was out to breakfast with his wife, agreed.

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“If you get excellent service then the tip should reflect that and go toward the person, the individual, versus into a pot,” Bradley said.

Those who support the change generally feel it will help spread the wealth throughout, and help pay for improvements.

Patricia Smith, senior counsel at the National Employment Law Project and a former Obama administration solicitor of labor, countered to that that the proposed regulation "allows an owner to pocket all the tips, or redistribute them. What if he or she chooses to pocket all of them and then no one gets the tips?”

The government has opened a public comment period now through Feb. 5. To weigh in, visit the Federal Register's website.

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ONLINE: Click here to submit a formal comment on the Labor Dept. proposal

NBC 5's Ben Russell contributed to this report.