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February 21, 2018

Attorney General Kilmartin to Department of Labor: Let workers keep tips they have earned


Joining a coalition of 17 Attorneys General, Attorney General Peter F. Kilmartin filed an opposition to the U.S. Department of Labor proposal to rescind a rule that allows all employees to keep the tips they have earned. The rule issued in 2011 clarified that consistent with long-established cultural and legal understanding, gratuities are the sole property of employees. Under the Trump Administration’s proposed rule change, The Office of the Attorney General says employers would be allowed to pocket tips earned by employees who are paid the federal minimum wage.

According to the Economic Policy Institute, this could result in employers taking up to $5.8 billion of workers’ earned tips. The U.S. Department of Labor, which is spearheading the rule change, reportedly decided to shelve an economic analysis that highlighted the billions in gratuity earnings that workers could lose.

“Tens of thousands of Rhode Islanders are employed in the hospitality industry, and they work hard for and rely on the tips they earn,” said Attorney General Kilmartin in a statement. “This proposed change would have a very real and detrimental impact on their financial livelihood. To add insult to injury, the Department of Labor reportedly hid the economic analysis that showing the billions of dollars that would flow from the employees who earned it to employers to use as they see fit.”

Under the Fair Labor Standards Act (FLSA), employers are required to pay their employees the federal minimum wage. Employers can meet this requirement either by paying employees the full cash federal minimum wage – currently $7.25 per hour – or by paying a lower cash wage, no less than $2.13 per hour, and making up the difference with the tips that the employee earns. The latter practice is known as a “tip credit.” The Trump Administration’s proposed rescission of the 2011 rule would allow employers who pay employees the federal minimum wage to claim the employees’ tips for any purpose.

Joining Attorney General Kilmartin in sending the letter are Attorneys General from California, Illinois, Pennsylvania, Connecticut, Delaware, District of Columbia, Iowa, Maine, Maryland, Massachusetts, New York, North Carolina, Oregon, Washington, Vermont, and Virginia.

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