Restaurants could require servers to share tips under new Labor Department rule

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Servers and other restaurant workers who receive tips could soon be required by their employer to share that extra cash with non-tipped, back-of-house staff members such as dishwashers and cooks, according to a new regulation announced by the Labor Department Tuesday. 

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Under the new rule, employers are prohibited from keeping tips by their employees, regardless of whether the employer takes a tip credit under the Fair Labor Standards Act. Employers who unlawfully keep employees' tips will face civil money penalites not to exceed $1,100. 

Restaurant managers and supervisors also are prohibited from keeping employees' tips or participating in a tip pool. 

In this Sept. 29 photo, restaurant owner Samantha DiStefano, left, of Mama Fox, prepares to hand menus to patrons dining outside at her Brooklyn establishment, in New York. (AP Photo/Kathy Willens, File)

The regulation removes a 20% limitation on the amount of time that an employee for whom an employer takes a tip credit can perform related, non-tipped duties. The rule states that employers can apply tips as part of meeting the minimum wage when a worker performs non-tipped duties for a "reasonable time" before or after performing tipped duties.

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Cheryl Stanton, the Labor Department’s wage and hour administrator, said the new rule "provides clarity to employers" and could increase pay for workers who have been "excluded from participating in tip pools in the past"

In addition, she claimed the newly allowed tip sharing can "reduce wage disparities among all workers who contribute to customers’ experience."

The FLSA requires that covered employers 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 per 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 a Labor Department economist during the Obama administration, told the Wall Street Journal that the move will "allow employers to shift work from non-tipped to tipped workers."

Shierholz also argues that the rule does not address wage inequality, adding that if the Trump administration wanted to raise pay for back-of-the-house workers, "they could have supported a minimum wage increase."

The final rule, an amendment of the 2018 Consolidated Appropriations Act, will take effect in 60 days, according to the Labor Department.