Budget Bill Prevents Restaurants From Redistributing Tips

The $1.3 trillion budget bill passed last week will give stronger protections for the tips that some restaurant workers are paid out by customers.

The bill turns into law an Obama-era rule that prohibited restaurant managers from redistributing the tips from servers to other employees — such as cooks, dishwashers and other managers.

President Donald Trump’s administration and the National Restaurant Association had pushed to roll back the rule and some said that was necessary to help redistribute pay to lower paid staff without raising prices for customers. But some worried that restaurants could simply take tips without any restrictions.

Labor groups celebrated the inclusion of the provision in the budget bill, which was signed into law late Friday and would now require Congress’ action to overturn.

“The fact that hundreds of thousands of workers stood up and said no to employers taking their tips, and that Congressional leadership listened and acted, is a testament to the power of workers standing up together,” said a statement from Saru Jayaraman, co-founder and president of Restaurant Opportunities Centers (ROC) United, a restaurant worker advocacy group.

Central Florida restaurant owners have been divided on the issues, saying there is a need to figure out how to pay back-of-the-house employees more, but also reward servers, hosts and bartenders. At some restaurants, such as Olive Garden for instance, servers make on average between $20 and $22 an hour, depending on the timing and location.

There are about 38,000 servers in the Orlando area, according to Bureau of Labor Statistics data.

The ruling extends beyond restaurant workers to other industries such as valets, car wash workers and hotel attendants.

Restaurants are still allowed to make tipped workers share tips with one another, such as all the servers at a restaurant pooling tips.

One provision in the law also allows restaurants that pay servers a full minimum wage to pool tips, as opposed to those that make the tipped minimum wage, which in Florida is $5.23 an hour but in some other states is as low as $2.13 an hour.

“As the voice for restaurants in every local community, we want to ensure that servers, bussers, dishwashers, cooks, and others who work as a team to provide great customer service in the industry have access to share in tips left by customers, as this legislation clearly allows,” said a statement from Angelo Amador, executive director of the Restaurant Law Center, an arm of the National Restaurant Association.

Employers are still required to make up the difference if an employer’s base wages plus tips don’t equal minimum wage.