Even though restaurant owners and managers are barred from skimming tips for themselves, new ‘tip pool’ rule could drastically reduce the total out of pocket wages they have to pay

A new rule recently finalized and published by the Department of Labor is set to take effect early in 2021. It short, it will allow restaurant owners to take tipped employees’ tips to pay “back of house” workers, such as cooks and dishwashers.

While on the surface this looks like an opportunity for previously non-tipped workers to share in the upside and take home more pay, balancing out pay disparities, many believe it is simply a redistribution to offset reductions in total labor cost paid by the restaurant owner.

For example, front of house workers such as bartenders, servers, hosts, bussers may have their hourly pay jump to the federal minimum wage of $7.25 per hour, which has not changed since 2009. This would be up from the federal minimum tipped-wage of $2.13 per hour paid out to these tipped workers (varies by state). On the flip side, with formerly non-tipped workers able to receive tips now some restaurants may very well reduce the hourly rate paid down to the minimum wage. So a cook earning $15 per hour can be reduced to $7.25 with the pooled tips paid out to balance this.