Ruling could affect tips-based jobs

Feb. 8, 2018 | G. Michael Dobbs
news@thereminder.com

I don’t mean to write about similar topics two weeks in a row, but a New York Times story on Feb. 4 brought forth a new wrinkle for the tips-oriented economy.

The Department of Labor wants to rescind a ruling so that an employer can collect tips and then redistribute them as long as they are paying the employees the federal minimum wage.

Here is how the government explained it: “The U.S. Department of Labor today [Dec. 4, 2017] announced a Notice of Proposed Rulemaking (NPRM) regarding the tip regulations under the Fair Labor Standards Act (FLSA). Under the proposed rule, workplaces would have the freedom to allow sharing of tips among more employees.  The proposal would help decrease wage disparities between tipped and non-tipped workers – an option that is currently restricted by a rule promulgated in 2011 that has been challenged in a number of courts.

“The Department’s proposal only applies where employers pay a full minimum wage and do not take a tip credit and allows sharing tips through a tip pool with employees who do not traditionally receive direct tips – such as restaurant cooks and dish washers. These ‘back of the house’ employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers.  The proposal would not affect current rules applicable to employers that claim a tip credit under the FLSA.”

Immediately I wondered if this would mean a loss of revenue for servers at participating businesses. If a successful server is making more than $7.25 an hour with tips, it sounds to me they are going to be in a hole.

Instead of making a business owner responsible for paying a “back of the house” employee a better wage, the Department of Labor wants the money earned by other employees to be shared with them.

Hmm, sounds a little like socialism to me! I like their use of the word “freedom,” too. The rule has not yet been enacted by the way.

Now let me stress that I do not know if this particular rule will be put into place and I don’t know how many, if any, local employers will adopt it. In the universe of news in which I inhabit, it’s just a weird and interesting coincidence this story is manifesting itself at the same time we are looking to add hundred of tip-oriented jobs in Springfield.

I want to stress to my friends at MGM Springfield I don’t know if they are going to participate in this strategy so my remarks are not aimed at them. Sometimes, people assume that I’m lobbing a bomb in their direction when I’m not.

I have worked for tips as a bartender. My wife and my granddaughter have both worked as servers. The level of service one provides can translate into earning more money. If I was in that kind of job today and if I thought my ability to earn tips was going to be eroded, I would be pretty worried.

This move may save employers some dough in the short term, but may hurt them in the long term. In a service-oriented job, taking tips away will remove the incentive to provide superior service. If the service is inferior at a restaurant, bar or other place where tips count, customers may be inclined to go elsewhere.

And now a note that is about MGM Springfield. Cambridge College is offering a “hospitality pre-apprenticeship program” for a number of jobs at MGM Springfield. These include a two-week class for restaurant servers ($259), a one week course for casino porters ($159), a one week course for bussers/runners ($159) and a three-week course for security officers ($359), among others.

All of the successful students will be issued a certificate of completion, which can be used to apply for a job, but does not ensure a job.

There is a shift here in entry-level positions where traditionally employers would take on the cost and effort to train new workers. Now, those interested in these jobs have to pay for the training themselves.

I’m wondering when other employers will require their job applicants to take these courses and pay for them themselves. It could be a future trend.

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