Under federal wage law, employers who pay the tipped minimum wage, which is lower than the standard minimum wage of $7.25 per hour, can't pool and share tips with non-tipped workers. In 2011, the Obama administration expanded this to include businesses that pay the higher minimum wage. The Department of Labor's proposed rule would only apply to businesses that paid employees at least the federal minimum wage of $7.25 an hour.
While the Obama-era rule declared that tips belonged to the workers who collected them, the Department of Labor argued the rule contributed to pay disparities between servers and other staff like dishwashers. A reversal of the rule would allow tip sharing with workers who typically don't receive extra cash.
"These 'back of the house' employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers," the U.S. Department of Labor said in a statement on Monday.
However, worker advocates groups are fighting the proposed rule by arguing that it could allow businesses to keep employees' tips as long as the staffers earn the base minimum wage.