"Tip theft" occurs when owners, managers, and supervisors steal all or a portion of service workers' hard earned tip money. It's a rampant problem throughout the service industry that robs low-wage workers of money they've already earned. There is no federal law against the practice.
Sometimes managers steal tips by directly demanding a cut from workers, but often they steal through deceptive service charges, credit card fees, or by including themselves in tip pools. The proposed bill would ban all forms of tip theft.
Here are the facts:
•According to the 2011 Economic Policy Institute report “Waiting for Change,” tipped workers are more than twice as likely to be below the federal poverty line as the rest of the workforce. Waiters in particular are almost three times as likely to be below the poverty line.
•Rhode Island's tipped workers often make as little as $2.89/hr in wages. The rest is supposed to be made up for with tips, but too often workers aren't able to pocket all of their hard-earned tip money.
•Tip theft is a common practice in hotels, restaurants, banquet halls, casinos, and the rest of the service industry. Recent high profile court cases filed against Mario Batali's restaurants, Hooters, and Yankee Stadium are not isolated incidents, but rather symptomatic of an injustice happening everyday in countless businesses.
•There is no federal law against tip theft. In theory the Department of Labor says all tips belong to employees, but in practice they only enforce the law if the tip stealing is putting the worker below minimum wage. So, if your boss let's you keep enough to make $7.25/hr, there's nothing you can do about it.
•Because it's such a widespread problem that lacks federal regulation, many states and cities have stepped up to prohibit tip theft. New York, Massachusetts, California, and Utah are just a few of the states that have stepped up to pass legislation. Cities such as Long Beach and Philadelphia have also passed their own laws. Workers' rights groups in San Antonio are currently pushing to pass an an act to cover their city.
•Rhode Island's proposed legislation, HB5121 and SB574, is being widely supported by the state's labor and activist community. UNITE HERE 217, RI Jobs with Justice, Ocean State Action, Fuerza Laboral, Olneyville Neighborhood Association, AFSC, Mark Gursky, and many more have signed on in support.
•Rhode Island's law would target the four main types of tip theft:
1.It bans managers, owners, or supervisors from simply demanding a cut of workers' tips, whether it be a percentage, a flat rate, or for an invented “fee” for “insurance costs” or other imaginary charges
2.It stops businesses from charging customers deceptive “service charges” or “administrative fees” that are partially or wholly absorbed by the business or by managerial employees. Customers believe such fees to be gratuities going to employees, and so don't tip workers on top of them. Businesses would still be allowed to charge customers these fees but they would need to clearly label the charges as not being a tip.
3.It prohibits employers from charging workers fees when customers tip on credit cards. Credit card companies charge businesses a card processing fee, and businesses often pass that fee onto workers when the customer tips on a credit card. The bill would require that workers receive the full tip that customers write on the credit card tip line.
4.It ban managers, owners, and supervisors from including themselves in tip pools. It prohibits back-of-the-house workers—such as dishwashers and cooks--from being included in tip pools. This is to prevent managers from paying non-tipped workers lower wages then using servers' tip money to compensate. Tip pooling would still be allowed, whether imposed by managers or created voluntarily by workers, so long as only customarily tipped employees are included in the pool.
•Some industry lobbyists want to water down the bill or create loopholes for certain kinds of businesses. We believe stealing workers tips is wrong no matter how or where it happens. We want the bill passed as it's written.
•Please call your lawmakers and sign our petition to help us end tip theft in Rhode Island.
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