New force aims to OK tip pooling

tip jar

A group newly formed to protect and promote the restaurant industry’s interests in the courts is awaiting a response to its initial effort, a push to make tip pooling legal again.

The Restaurant Law Center, formed by the National Restaurant Association and other industry groups, has petitioned the Supreme Court to hear a case that challenges the U.S. Department of Labor’s stance on tip sharing. The DOL issued a ruling in 2011 that front-of-the-house staffers cannot share gratuities with back-of-the-house workers, regardless of whether their employers take a tip credit.

That development was bad news for full-service restaurants, who have struggled to fill kitchen posts because working in the dining room is much more lucrative. Tip pooling was a way of lessening the difference.

The petition filed by the Center urges the nation’s highest court to hear a lawsuit that disputes the DOL’s authority to outlaw tip pooling, a practice that is still common within the industry. The NRA is the lead plaintiff in the suit.

Tips and the related do’s and don’ts for restaurants are regulated by the DOL under the Fair Labor Standards Act. But tip pools are technically formed and run by employees, without restaurants’ involvement. Opponents of the DOL’s decision on tip pooling contend the department doesn’t have the authority to tell servers what they can or cannot do with their money.

“The department of labor doesn’t have any authority to regulate employees’ tips,” says Angelo Amador, executive director of the Center. “They take their authority from tip regulations and they are overreaching here.

“Right now, the ball is in the Department of Labor’s court,” he continues. “They have 30 days to respond. They can agree with us, or they can file a brief. Or they can do nothing. The most likely scenario is that they’d follow with some action.”

The Supreme Court would then decide whether or not to act on the Center’s petition.

The best case scenario from the industry’s standpoint, says Amador, is that the court goes ahead and hears the case this term.

“This term, but this term doesn’t mean this week. We’re talking at least a month and a half,” he says.

A favorable decision in the case would restore a familiar way of narrowing the pay discrepancies between tipped and nontipped employees, a reality that has stymied many restaurants in their efforts to fully staff kitchens. 

“They’re always looking for ways they can level the playing field a little bit more,” comments Amador.

A court decision to hear the case would mark a key initial victory for the Center. Amador moved over from the NRA to assume leadership of the 501(c)6, a qualified nonprofit. He likens the organization to the litigation arms of such other powers in Washington, D.C., as the U.S. Chamber of Commerce.

The Center has its own budget and staff. Although the NRA has used litigation in the past to challenge such measures as New York’s minimum wage hike, the Center will be a permanent fixture. 

“It got started because we found ourselves more and more doing this—running to court because there was something targeting the restaurant industry,” says Amador.

Each time the NRA sought to fight the industry’s battles in court, it had to secure the funds and expertise. Now the Center will be at the ready, with its own staff and funding.

The Center is already considering its next focus. “We’re looking at class-action waivers. And we have a lot of issues from the [National Labor Relations Board] that do not go away with a new administration or even if the board is reconstituted. Those are the results of case laws, so we’ll look at that.”


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