Proposed tip rule change may affect Wyoming servers

CHEYENNE – As a single father of an eighth-grader, Mark Miller relies on the generosity of his parents and neighbors to help out during long work weeks.

Miller, who has had full custody of his son, Cody, since he was 19, is a server at a local chain restaurant on the outskirts of Cheyenne. He typically works 10- to 12-hour days taking orders, serving food and cashing out customers. He handles seven tables at a time, requiring considerable time management and memorization skills. Although he’s paid little more than minimum wage, he said he’s able to make it work with an extra $250 per week in tips.

“There are days I don’t see (Cody) more than an hour or two before bed,” he said. “He’s a good kid, so he understands, but I’m hopefully going to be able to find a less demanding job before he gets to high school.”

Miller could not disclose the name of the restaurant he works for due to management policy, but his story is shared by many of the more than 1 million servers and bartenders in the food-service industry nationwide.

Right now, a decades-old Wyoming law does not allow any kind of required tip-sharing in the state. Once tips are paid to an employee, they are the property of that person. Wyoming employees, however, may voluntarily agree to a tip-pooling arrangement, but it is not valid if the employer coerces anyone to participate.

But that could soon change. In December, the U.S. Department of Labor announced a proposed rule change that would allow business owners greater authority on tip-pooling at restaurants.

A 2011 Fair Labor Standards Act rule barred restaurant owners from requiring anyone but traditionally tipped employees from participating in tip pools. This includes servers and bartenders.

Under the proposed change, owners would be allowed to use tip pools for any reason they see fit, including pocketing the money, as long as employees are paid the federal minimum wage of $7.25 per hour.

The Trump administration says the rule would benefit non-tipped workers, such as dishwashers and line cooks, but the Economic Policy Institute, a left-wing think tank, estimates tipped workers could lose $5.8 billion per year in tips as a result.

That’s 16 percent of the $36.4 billion earned in tips every year.

Heidi Shierholz, director of policy at the Economic Policy Institute, said the analysis likely used similar data and methodology that the labor department would have. The institute found that nearly 80 percent of tips redistributed from servers would be taken from women.

“It is useful to know that, theoretically, employers could give the tips to back-of-the-house and other non-tipped workers, but it doesn’t require them to,” Shierholz said.

The National Restaurant Association, though, says the proposed rule reflects better public policy than the existing version of the rule.

Given the demographics in restaurants, where kitchen staff is made up of a more minority population than dining room staff, it is especially important that federal law not impose barriers to kitchen workers receiving greater earnings, according to Angelo Amador, executive director of Restaurant Law Center.

“Allowing the kitchen staff to enjoy a share of the tips that their efforts help to generate is more equitable than the current regulations, which categorically deny kitchen staff an opportunity to participate in tips,” Amador said.

He said that a number of states may not immediately be affected by the rule change due to local regulations.

“Contrary to what it is being reported, the portions being rescinded may not have an impact in many states,” he said. “I would be surprised if many state restaurant associations have a position at all.”

Chris Brown, executive director of the Wyoming Lodging and Restaurant Association had not yet heard much about the proposed rule, nor had many Wyoming legislators. Many local restaurant and bar owners were unwilling to comment about whether or not they would consider implementing it.

Like many national laws, local statutes often take precedence in these cases said Kelly Roseberry, an attorney with the Wyoming Department of Workforce Services’ labor standards office.

“It may affect Wyoming, but it would be something the Legislature would have to address how it affects our specific state statute,” Roseberry said.

There is no word on whether this will be considered during the current legislative session, but if the rule goes into effect after the session ends, it’s possible the Legislature would consider it next year.

With the employment laws the department enforces, the state law applies if a business has two or more employees, and the federal law applies with 15 or more employees. This doesn’t necessarily apply to wage disputes, though.

“It sometimes depends on if the federal jurisdiction is going to reach to each state,” she said.

Her department often enforces unpaid wage claims in the state and educates employers on existing labor laws.

“We do get complaints from time to time that employers are making employees do tip-sharing,” she said. “We will reach out to those employers and tell them they are not in compliance with the Fair Labor Standards Act in Wyoming.”

She said the department receives roughly 500 unpaid wage claims a year, about

12 of which are tip-sharing complaints statewide. The department can order employers to pay back tips to that employee. If they don’t, they can sue in District Court, or send the employer to collection agencies.

“The statute is clear and established,” she said. “Employers in Wyoming know they’re not supposed to be doing this.”

For Miller, the rule change is more than just policy.

“I agree that cooks work just as hard as we do and deserve some form of additional tipping,” Miller said. “I don’t think that should come out of the pockets of other minimum-wage workers, though.”