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The Dept. of Labor proposes delay of a Trump rule that would have reduced some wages for tipped workers

Feb 4, 2021, 00:48 IST
Business Insider
A waiter delivers food to a table at Bottino Restaurant in Chelsea as New York City restaurants open for limited capacity indoor dining on October 1, 2020 in New York.BRYAN R. SMITH/AFP via Getty Images
  • The Dept. of Labor proposed to extend the start date of a Trump rule to allow tipped workers to receive sub-minimum wage while performing tipped work.
  • Extending the start date would allow for the Dept. to consider comments on the rule following the criticism is has received.
  • The Economic Policy Institute estimated that workers would lose $700 million annually if the rule is implemented.

The Dept. of Labor proposed on Wednesday to delay the effective start date of a rule issued by the previous administration to permit tipped workers to be paid sub-minimum wage while performing non-tipped work.

In December, the Labor Department's Wage and Hour Division published its final rules on tipping, which included allowing employers who pay workers the full minimum wage to establishing a tipping pool to share tips with workers who typically don't receive them.

The rules also called for eliminating the 80/20 rule, which allowed employees to be paid the tipped minimum wage while performing non-tipped tasks for up to 20% of their time. The latter rule received criticism from labor experts due to the effects it would have on workers, and President Joe Biden's Labor Department requested that the effective start date be pushed to April 30 to allow for time to consider comments.


"WHD believes that the proposed delay... is reasonable given the issues of fact, law, and policy raised by the rule, and will not be disruptive, given that the Tip Rule is not yet effective and WHD has not implemented the rule," the memo said.

In response to the rules that are scheduled to take effect on March 1, labor experts expressed concern with the vague standards that were put forth to replace the 80/20 rule because it could potentially allow tipped workers to work an extended amount of time on non-tipped work while still getting paid subminimum wage.

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The Economic Policy Institute - a non-partisan think tank - estimated that workers could lose more than $700 million annually under Trump's rule.

"With no meaningful limit on the amount of time tipped workers may perform nontipped work, employers could capture more of workers' tips," the Economic Policy Institute wrote. "It is not hard to imagine how employers of tipped workers might exploit this change in the regulation."

The tipped minimum wage is currently set at $2.13 per hour, and if the 80/20 rule is not in place, workers could perform non-tipped tasks, like cleaning, while only receiving the tipped minimum wage.

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