State Pushes Back Against Fed Proposal Threatening Worker Tips

SACRAMENTO – California Attorney General Xavier Becerra today announced that he had joined a coalition of 19 attorneys general in opposing a federal proposal that threatens to rob workers of tips that make up a substantial portion of their wages.

Currently, employees who receive less than the minimum wage can only be assigned to do non-tip-generating work 20 percent of the time, under the assumption that their tips will allow them to earn at least the federal minimum wage. The U.S. Department of Labor (DOL) is attempting to repeal that limit however, and the attorneys general believe the government’s new proposal could result in wage theft and deprive tipped workers nationwide of millions of dollars of wages.

“This proposed rule is a blatant attempt to steal from the poor and give to the rich,” said Attorney General Becerra. “Everyone deserves to be able to earn a decent, living wage. Instead, the Trump Administration is threatening to rob people of their tips. While the Trump Administration retreats on worker rights, states across the country are stepping up to protect workers who form the foundation of our economy.”

Even though tip credits that allow employers to pay less than minimum wage are unlawful in California, the state is concerned to protect an overall regulatory framework that upholds the rights of workers across the country. In this case DOL’s proposal would effectively repeal the federal 80/20 rule, which prohibits employers from requiring workers who earn subminimum wages of $2.13 per hour to spend more than 20 percent of their time on tasks that do not generate tips. Employers would thus be able to assign workers tasks that do not generate tips while still only paying them a sub-minimum wage of $2.13 per hour.

In a restaurant, for example, that would mean that instead of being able to wait tables at least 80 percent of the time, a server could be required to spend all of their work time on non-tipped tasks like cleaning and setting tables, or ‘off floor’ tasks such as toasting bread, making coffee, or washing dishes etc.

Under the 80/20 rule, tips are meant to account for the gap between the federal minimum wage of $7.25 per hour and a worker’s sub-minimum wages. DOL’s proposal would not only affect people in the restaurant and food service industries, but also people who make tips in a wide range of occupations, such as workers at nail salons or car washes.

This is not the first time California’s Attorney General has clashed with the Trump administration. Last year, the Attorney General co-led a coalition of attorneys general in opposition to a proposed rule that threatened to force workers to share their tips with their employers. And last month, the Attorney General called on the Federal Trade Commission to ban non-compete agreements, which can prevent employees from seeking better pay and benefits by going to work for a competitor.

The attorneys general of Illinois, Massachusetts, Pennsylvania, Delaware, Hawaii, Iowa, Maine, Maryland, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia joined with Attorney General Becerra in submitting the letter.

A full copy of the letter can be viewed at: https://oag.ca.gov/system/files/attachments/press-docs/Comment%20of%2019%20State%20Attorneys%20General%20re%20RIN%201235-AA21.pdf