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 receive from 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 the tips themselves without any restrictions.

Labor groups celebrated the inclusion of the provision in the budget bill, which was signed into law last week 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, servers make on average between $20 and $22 an hour, depending on the timing and location.

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

But there are limits to such pooling. In December, the Labor Department had proposed a rule that would allow employers such as restaurant owners to pool their employees' tips and redistribute them as they saw fit — including, potentially, to themselves. That generated a bipartisan outcry, and the bill spells out explicitly that such tip pooling is not permitted: "An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees' tips, regardless of whether or not the employer takes a tip credit."

In a statement, Angelo Amador, executive director of the Restaurant Law Center, an arm of the National Restaurant Association, said: "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."