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Posts Tagged ‘Labor Department’

Trump’s Labor Dept. Has Declared War on Tipped Workers

Wednesday, December 4th, 2019

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In October, the Trump administration published a proposed rule regarding tips which, if finalized, will cost workers more than $700 million annually. It is yet another example of the Trump administration using the fine print of a proposal to attempt to push through a change that will transfer large amounts of money from workers to their employers. We also find that as employers ask tipped workers to do more nontipped work as a result of this rule, employment in nontipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.2%, resulting in 243,000 jobs shifting from being nontipped to being tipped. Given that back-of-the-house, nontipped jobs in restaurants are more likely to be held by people of color while tipped occupations are more likely to be held by white workers, this could reduce job opportunities for people of color.

Employers are not allowed to pocket workers’ tips—tips must remain with workers. But employers can legally “capture” some of workers’ tips by paying tipped workers less in base wages than their other workers. For example, the federal minimum wage is $7.25 an hour, but employers can pay tipped workers a “tipped minimum wage” of $2.13 an hour as long as employees’ base wage and the tips they receive over the course of a week are the equivalent of at least $7.25 per hour. All but seven states have a subminimum wage for tipped workers.

In a system like this, the more nontipped work that is done by tipped workers earning the subminimum wage, the more employers benefit. This is best illustrated with a simple example. Say a restaurant has two workers, one doing tipped work and one doing nontipped work, who both work 40 hours a week. The tipped worker is paid $2.50 an hour in base wages, but gets $10 an hour in tips on average, for a total of $12.50 an hour in total earnings. The nontipped worker is paid $7.50 an hour. In this scenario, the restaurant pays their workers a total of ($2.50+$7.50)*40 = $400 per week, and the workers take home a total of ($12.50+$7.50)*40 = $800 (with $400 of that coming from tips).

But suppose the restaurant makes both those workers tipped workers, with each doing half tipped work and half nontipped work. Then the restaurant pays them both $2.50 an hour, and they will each get $5 an hour in tips on average (since now they each spend half their time on nontipped work) for a total of $7.50 an hour in total earnings. In this scenario, the restaurant pays out a total of ($2.50+$2.50)*40 = $200 per week, and the workers take home a total of ($7.50 + $7.50)*40 = $600. The restaurant’s gain of $200 is the workers’ loss of $200, simply by having tipped workers spend time doing nontipped work.

To limit the amount of tips employers can capture in this way, the Department of Labor has always restricted the amount of time tipped workers can spend doing nontipped work if the employer is paying the subminimum wage. In particular, the department has said that if an employer pays the subminimum wage, workers can spend at most 20 % of their time doing nontipped work. This is known as the 80/20 rule: employers can only claim a “tip credit”—i.e., pay tipped workers a base wage less than the regular minimum wage—if tipped staff spend no more than 20 % of their time performing nontipped functions; at least 80 % of their time must be spent in tip-receiving activities.

The protection provided by this rule is critical for tipped worker. For example, in a restaurant, the 80/20 rule prevents employers from expecting servers to spend hours washing dishes at the end of the night, or prepping ingredients for hours before the restaurant opens. Occasionally, a server might play the role of the host, seating guests when a line has formed, or filling salt and pepper shakers when dining service has ended—but such activities cannot take up more than 20 % of their time without employers paying them the full minimum wage, regardless of tips.

The Department of Labor (DOL), under the Trump administration, has proposed to do away with the 80/20 rule. Workers would be left with a toothless protection in which employers would be allowed to take a tip credit “for any amount of time that an employee performs related, nontipped duties contemporaneously with his or her tipped duties, or for a reasonable time immediately before or after performing the tipped duties” (see page 53957 of the proposed rule).

With no meaningful limit on the amount of time tipped workers may perform nontipped work, employers could capture more of workers’ tips. It is not hard to imagine how employers of tipped workers might exploit this change in the regulation.

Consider a restaurant that employs a cleaning service to clean the restaurant each night: vacuuming carpets, dusting, etc. Why continue to pay for such a service, for which the cleaning staff would need to be paid at least the federal minimum wage of $7.25 per hour, when you could simply require servers to spend an extra hour or two performing such work and only pay them the tipped minimum wage of $2.13 per hour? Or, a restaurant that currently employs three dishwashers at a time might decide they can manage the dish load with only one dedicated dishwasher if they hire a couple extra servers and require all servers to wash dishes periodically over the course of their shifts. Employers could pay servers less than the minimum wage for hours of dishwashing so long as they perform some tipped work right before or after washing dishes.

The department recognizes that workers will lose out under this change, stating that “tipped workers might lose tipped income by spending more of their time performing duties where they are not earning tips, while still receiving cash wages of less than minimum wage” (see page 53972 of the proposed rule). Tellingly, DOL did not provide an estimate of the amount that workers will lose—even though it is legally required, as a part of the rulemaking process, to assess all quantifiable costs and benefits “to the fullest extent that these can be usefully estimated” (see Cost-Benefit and Other Analysis Requirements in the Rulemaking Process).

The department claims they “lack data to quantify this potential reduction in tips.” However, EPI easily produced a reasonable estimate using a methodology that is very much in the spirit of estimates the Department of Labor regularly produces; DOL obviously could have produced an estimate. But DOL couldn’t both produce a good faith estimate and maintain the fiction that getting rid of the 80/20 rule is about something other than employers being able to capture more of workers’ tips, so they opted to ignore this legally required step in the rulemaking process.

Below we describe the methodology for our estimate. The simplicity and reasonableness of this approach underscores that by not producing an estimate, the administration appears to simply be trying to hide its anti-worker agenda by claiming to not be able to quantify results.

Methodology for estimating tips captured by employers

The remainder of this piece describes the methodology for estimating the total pay transferred from workers to employers as a result of this rule described above. To evaluate how this rule change would affect pay, we use data from the Current Population Survey (CPS), restricted to states with a tip credit (i.e., that allow employers to pay a subminimum wage to tipped workers), to estimate how much employers might shift work from traditionally nontipped to tipped staff. Doing so would allow them to spread out the total pool of tips received over more people for whom employers can pay less than the minimum wage, thereby reducing employers’ wage responsibility. We then estimate the change in total earnings that would occur for food service workers if that shift in employment took place.

The CPS is a household survey that asks workers about their base wages (exclusive of tips) and about their tips earned, if any. One problem with the CPS data, however, is that earnings from tips are combined with both overtime pay and earnings from commissions. Researchers refer to the CPS variable that provides the aggregate weekly value of these three sources of earnings (overtime, tips, and commissions) as “OTTC.” In order to isolate tips using this variable, we first restrict the sample to hourly workers in tipped occupations, to help ensure that we are not picking up workers who are likely to earn commissions.

For hourly workers in these tipped occupations who work less than or equal to 40 hours in a week, we assume that the entire amount of OTTC earnings is tips. For hourly workers in tipped occupations who work more than 40 hours, we must subtract overtime earnings. We calculate overtime earnings for these workers as 1.5 times their straight-time hourly wage times the number of hours they work beyond 40. For these workers, we assume their tipped earnings are equal to OTTC minus these overtime earnings.

Some workers in tipped occupations do not report their tips in the OTTC variable; however, the CPS also asks workers to report their total weekly earnings inclusive of tips, and their base wage exclusive of tips. For those workers in tipped occupations with no reported value in the OTTC variable, but whose total weekly earnings is greater than the sum of their base wage times the hours they worked, we assume the difference is tips.

In other words, for hourly workers in tipped occupations we calculate tips in two ways:

1. For those who report a value for OTTC:

Weekly tips = OTTC for those who work ? 40 hours per week, and

Weekly tips = OTTC ? [(base wage) × 1.5 × (hours worked ? 40)] for those who work > 40 hours per week.

2. For those who do not report a value for OTTC:

Weekly tips = Total weekly earnings inclusive of tips – (base wage x hours worker).

In cases where tips can be calculated both ways, we take the larger of the two values.

Standard economic logic dictates that employers will spread out aggregate tips over as many workers they can—thereby reducing their wage obligations and effectively “capturing” tips. They will shift work from nontipped to tipped workers until the resulting average wage (combined base wage plus tips) of their tipped workers is at or just above the hourly wage these same workers could get in a nontipped job. For employers of tipped workers to get and keep the workers they need, tipped workers must earn as much as their “outside option,” since, all else being equal (i.e., assuming no important difference in nonwage compensation and working conditions), if these workers could earn more in another job, they would quit and go to that job. But for employers to keep these workers, they do not need to earn any more than they could earn in another job (again, assuming all else is equal), since as long as they are earning what they could earn in another job, it would not be worth it to these workers to quit.

To calculate the “outside option wage,” we use regression analysis to determine the wage each worker would likely earn in a nontipped job. We regress hourly wage (including tips) on controls for age, education, gender, race, ethnicity, citizenship, marital status, and state, and use the results of that regression to predict what each tipped worker would earn in a nontipped job. We set a lower bound on predicted hourly wages at the state minimum wage. We refer to the predicted value as the outside option wage—it’s the wage a similar worker in a nontipped job earns. We assume if a worker currently earns less than or equal to their outside option wage, their earnings cannot be reduced because if their earnings are reduced, they will leave their job and take their outside option.

However, if a worker currently earns more than their outside option wage, their earnings can be reduced by the amount the worker earns above the outside option wage, since as long as their earnings are not reduced below their outside option wage, they will have no reason to leave. We also assume that if their base wage is greater than the state minimum wage—i.e. if their employer is not taking the tip credit—their earnings will not be reduced, since the 80/20 rule applies only to tipped workers who are paid a subminimum base wage. We calculate new average tips earned as the aggregate tips of all tipped workers minus the aggregate amount, just described, by which their earnings can be reduced, divided by the total number of tipped workers.

Using this estimate of new average tips earned, we can estimate how much employers might shift the composition of employment by reducing the number of nontipped workers and adding more tipped ones. We assume that the total amount of tips earned remains the same— it is just spread out over more tipped workers (who are now doing more nontipped work). In particular, we assume that the new number of tipped workers is the number that, when multiplied by the new average tips earned, is equal to the total aggregate tips before the change.

We operationalize this by multiplying the sample weights of tipped workers by total aggregate tips divided by the difference between total aggregate tips and the aggregate amount by which earnings can be reduced. We then assume that the number of tipped workers added is offset one-for-one by a reduction in the number of nontipped workers who have food service occupations. We operationalize this by multiplying the sample weights of nontipped workers by one minus the ratio of the increase in tipped workers to the original number of nontipped workers. We find that employment in nontipped food service occupations will decline by 5.3% and employment in tipped occupations will increase by 12.1%, resulting in 243,000 jobs shifting from being nontipped to being tipped as a result of this rule. The work that had been done by those nontipped workers will now be done by tipped workers, with tipped workers spending less time doing work for which they receive tips.

The loss in pay is calculated as the difference between current aggregate food service tips and new aggregate food service tips using the new employment weights just described for tipped and nontipped workers and the new average wages for tipped workers. We assume average wages for nontipped workers do not change. We estimate that there will be a transfer of $705 million from workers to employers if this rule is finalized.

Finally, it should be noted that our estimate of the transfer from workers to employers is likely a vast underestimate for three reasons. First, tips are widely known to be substantially underestimated in CPS data, thus it is highly likely that we are underestimating the amount of tips employers would capture as a result of this rule change. For example, we find that 47.6% of workers in tipped occupations do not report receiving tips. Similarly, using revenue data from the full-service restaurant industry and updating the methodology from Table 1 here to 2018, we find that tips in full-service restaurants are $30.5 billion, which is roughly twice the amount of tips reported in food service in the CPS. This means the amount employers will really capture is likely roughly twice as large as our estimate.

Second, we only estimated losses in food service. However, about 26.0 % of tips earned in the economy are not earned in restaurants or food service occupations. Combining these two factors together means what employers will really capture may be 2.5 times as large as our estimate. Third, our estimates assume that getting rid of the 80/20 rule will only have an effect if the employer is already taking a tip credit. This ignores the fact that some employers may be incentivized to start using the tip credit if the 80/20 rule is abolished, knowing that without the rule they will be able to capture more tips. Accounting for this factor would increase our estimate further.

The piece was also published at the Economic Policy Institute’s Working Economics Blog.

This article was originally published at In These Times on December 3, 2019. Reprinted with permission.

About the Author: Heidi Shierholz is Senior Economist and Director of Policy at the Economic Policy Institute. From 2014 to 2017, she served the Obama administration as chief economist at the Department of
Labor.
About the Author: David Cooper is a Senior Economic Analyst at the Economic Policy Institute.

Labor Department tells senators it’s too ‘complex’ to collect sexual harassment data

Thursday, May 3rd, 2018

The Labor Department told Democratic senators that it can’t collect data on sexual harassment in the workplace because it would be “complex and costly.” On Monday, Democratic senators dismissed that justification.

In January, 22 Democratic senators sent a letter to labor department officials requesting the department act on studying sexual harassment. Sen. Kirsten Gillibrand (D-NY) signed the letter and Sens. Kamala Harris (D-CA) Elizabeth Warren (D-MA), Bernie Sanders (I-VT), and others co-signed the letter, according toBuzzFeed.

Referring to the #MeToo movement, the letter noted that “there has not been an exact accounting of the extent of this discrimination and the magnitude of its economic costs on the labor force. We therefore request your agencies work to collect this data.”

CNN was the first to obtain the Labor Department’s response, which was addressed to Gillibrand. The department’s letter read, “There are a number of steps involved in any new data collection, including consultation with experts, cognitive testing, data collection training, and test collection. Once test collection is successful, there is an extensive clearance process before data collection can begin.”

The department went on to say that employers would have difficulty providing the information they’re requesting and that requesting additional information for the Bureau of Labor Statistics survey “may have detrimental effects on survey response.”

The letter mentions “alternative sources of information on sexual harassment,” such as the Bureau of Justice Statistics’ National Crime Victimization Survey, but senators sent a letter in response that essentially balked at that recommendation.

“…the Department is surely aware that not all sexual harassment rises to the level of a violent criminal act and therefore would not be captured by this survey,” the letter read.

Senators called the justifications for declining to work on the issue “wholly inadequate” and wrote that since they “hope that the Department would always consider rigorous methods inherent in data collection,” the department’s mention of its complexity should not justify the decision to not study sexual harassment. Senators also mentioned that the U.S. Merit Systems Protection Board did this type of data collection and analysis in the ’80s and that “Surely the government’s capacity to collect this data has only become more sophisticated over the past several decades.”

Senators from both parties asked the labor secretary to take some kind of action on sexual harassment at an April Senate panel on the budget. According to Bloomberg, at the time, Labor Secretary Alexander Acosta “expressed willingness to act.”

Many researchers have looked at the economic cost to harassed women themselves. Heather McLaughlin, an assistant professor of sociology at Oklahoma State University, has studied the career effects of sexual harassment and found that a lot of the women who quit jobs because of sexual harassment changed careers and chose fields where they expected less harassment. But that meant that some of those fields were female-dominated, and many female-dominated fields pay less. Some women were more interested in working by themselves after the harassment.

” … but certainly they’re being shuffled into fields that are associated with lower pay because of the harassment,” McLaughlin told Marketplace.

People who have been harassed also experience effects on their physical and mental health, such as anxiety, depression, and post-traumatic stress disorder. Victims of sexual harassment can also experience headaches, muscle aches, and high blood pressure.

Fifty-four percent of U.S. women said they received inappropriate and unwanted sexual advances from men, with 23 percent saying those advances came from men who had influence over their careers and 30 percent coming from male co-workers, according to a 2017 ABC News/Washington Post poll.

“Right now, we don’t know how many gifted workers and innovators were unable to contribute to our country because they were forced to choose between working in a harassment-free workplace and their career,” Gillibrand wrote in her January letter to the department.

This article was originally published at ThinkProgress on May 2, 2018. Reprinted with permission.

About the Author: Casey Quinlan is a policy reporter at ThinkProgress covering economic policy and civil rights issues. Her work has been published in The Establishment, The Atlantic, The Crime Report, and City Limits.

Trump Administration Should Rescind Proposal That Allows Bosses to Pocket Working People's Tips

Thursday, February 15th, 2018

As we previously reported, President Donald Trump’s Labor Secretary Alexander Acosta announced a new proposed regulation to allow restaurant owners to pocket the tips of millions of tipped workers. This would result in an estimated $5.8 billion in lost wages for workers each year?wages that they rightfully earned.

And most of that would come from women’s pockets. Nearly 70% of tipped workers are women, and a majority of them work in the restaurant industry, which suffers from some of the highest rates of sexual harassment in the entire labor market. This rule would exacerbate sexual harassment because workers will now depend on the whims of owners to get their tips back.

In a letter to Congress, the AFL-CIO opposed the rule change in the strongest possible terms, calling for the proposal to be rescinded:

Just days before the comment period for this [Notice of Proposed Rulemaking] closed, an extremely disturbing report appeared indicating that analysis of the costs and benefits in fact occurred, but was discarded. On Feb. 1, 2018, Bloomberg/BNA reported that the Department of Labor “scrubbed an unfavorable internal analysis from a new tip pooling proposal, shielding the public from estimates that potentially billions of dollars in gratuities could be transferred from workers to their employer.” Assuming these reports are correct, the Department of Labor should immediately make the underlying data (and the analyses that the Department conducted) available to the public. We call on the Department of Labor to do so immediately and to withdraw the related Notice of Proposed Rulemaking.

The AFL-CIO strongly urges the Department to withdraw the proposed rule, and instead focus its energies on promoting policies that will improve economic security for people working in low-wage jobs and empower all working people with the resources they need to combat sexual harassment in their workplaces.

The Department of Labor must provide an estimate of its proposed rules’ economic impact. However, while suspiciously claiming that such an analysis was impossible, it turns out that this wasn’t true:

Senior department political officials—faced with a government analysis showing that workers could lose billions of dollars in tips as a result of the proposal—ordered staff to revise the data methodology to lessen the expected impact, several of the sources said. Although later calculations showed progressively reduced tip losses, Labor Secretary Alexander Acosta and his team are said to have still been uncomfortable with including the data in the proposal. The officials disagreed with assumptions in the analysis that employers would retain their employees’ gratuities, rather than redistribute the money to other hourly workers. They wound up receiving approval from the White House to publish a proposal Dec. 5 that removed the economic transfer data altogether, the sources said.

The move to drop the analysis means workers, businesses, advocacy groups and others who want to weigh in on the tip pool proposal will have to do so without seeing the government’s estimate first.

Democrats in Congress quickly responded that the rule change should be abandoned, as the new rule would authorize employers to engage in wage theft against their workers. Sen. Elizabeth Warren (D-Mass.) said:

You have been a proponent of more transparency and economic analysis in the rulemaking process. But if DOL hid a key economic analysis of this proposed rule—and if [Office of Management and Budget] officials were aware of and complicit in doing so—that would raise serious questions about the integrity of the rule itself, and about your role and the role of other OMB officials in the rulemaking.

Take action today and send a letter to Congress asking it to stop Trump’s tip theft rule.

This blog was originally published at AFL-CIO on February 15, 2018. Reprinted with permission. 

About the Author: Kenneth Quinnell is a long-time blogger, campaign staffer and political activist. Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars.

22 Democratic senators want to know how sexual harassment financially impacts women

Tuesday, January 30th, 2018

Twenty-two Democratic senators are calling on the Labor Department to collect additional, better data regarding sexual harassment in the workplace.

The senators sent a letter to the department, signed by Sen. Kristen Gillibrand and co-signed by Sens. Elizabeth Warren (D-MA), Kamala Harris (D-CA), Cory Booker (D-NJ), and Bernie Sanders (I-VT), among others. Not a single Republican senator attached their name to the letter.

“What is known is that harassment is not confined to industry or one group. It affects minimum-wage fast-food workers, middle-class workers at car manufacturing plants, and white-collar workers in finance and law, among many others,” the senators wrote in the letter, provided to Buzzfeed. “No matter the place or source, harassment has a tangible and negative economic effect on individuals’ lifetime income and retirement, and its pervasiveness damages the economy as a whole.”

The Equal Employment Opportunity Commission reports that anywhere from 25 percent to 85 percent of women report having been sexual harassed in the workplace. An ABC News-Washington Post poll taken shortly after the New York Times bombshell report on Harvey Weinstein found that 33 million U.S. women, or roughly 33 percent of female workers in the country, have experienced unwanted sexual advances from male co-workers. Among those women who have been sexually harassed in the workplace, nearly all, 95 percent, say their male harassers typically go unpunished.

What this data doesn’t reveal, however, are the financial and personal costs of sexual harassment that women endure — and that’s exactly what these senators are in search of.

Workplace harassment has physical and psychological consequences, including depression and anxiety. These consequences can manifest themselves in missed workdays and reduced productivity, in addition to decreased self-esteem and loss of self-worth in the workplace.

In the restaurant industry, where 90 percent of female workers have experienced sexual harassment, more than half of these women endured the behavior, by both customers and co-workers, because they relied on the money. The Gillibrand letter describes these women as being “financially coerced” into enduring toxic workplace environments.

Sexual harassment in the workplace often forces female victims to leave their jobs to avoid continuing to experience the harassment. This frequently occurs in science, technology, and engineering fields, rather than low-wage service jobs.

According to data collected by sociologist Heather McLaughlin and others, about 80 percent of women who’ve been harassed leave their jobs within two years.

This call-to-action from Congress comes at time when the governing body is still trying to grapple with its own sexual harassment problem. As recently as this week, Sen. Marco Rubio (R-FL) flew to Washington D.C. from Florida to fire his chief of staff over sexual misconduct allegations.

Lawmakers in the House of Representatives unveiled bipartisan legislation last week to overhaul sexual harassment policies on Capitol Hill. The policy, as it stands now, overwhelmingly protects the harasser.

The new legislation also includes language that bars lawmakers from using taxpayer funds for settlements. As was first reported by the New York Times, Rep. Patrick Meehan (R-PA) used taxpayer money to settle a complaint from a former staffer. Rep. Blake Farenthold (R-TX) similarly confessed he agreed to an $84,000 settlement after a former aid accused him of sexual harassment. Farenthold as allegedly pledged to take out a personal loan to pay back the $84,000 dollars.

According to a GOP aide familiar with how the House sexual harassment legislation was crafted, Farenthold’s case led to the inclusion of a provision that would prevent the Office of Congressional Ethics (OCE) from reviewing complaints. Instead, complaints would automatically be referred to the House Ethics Committee, bypassing the agency in an effort to streamline the process.

The OCE reviewed complaints against Farenthold in 2015 but concluded there was not substantial reason to believe he sexually harassed his staffer.

This article was originally published at ThinkProgress on January 29, 2018. Reprinted with permission.

About the Author: Rebekah Entralgo is a reporter at ThinkProgress. Previously she was a news assistant and social media coordinator at NPR, where she covered presidential conflicts of interest and ethics coverage. Before moving to Washington, she was an intern reporter at NPR member stations WLRN in Miami and WFSU in Tallahassee, Florida. She holds a B.A in Editing, Writing, and Media with a minor in political science from Florida State University.

Tips Are More Important Than You Think

Monday, January 22nd, 2018

The Donald Trump Labor Department is proposing a rule change that would mean that restaurant servers and bartenders could lose a large portion of their earnings. The rule would overturn one put in place by the Barack Obama administration initiated, which prevents workers in tipped industries from having their tips taken by their employers. Under the new rule, business owners could pay their wait staff and bartenders as little as $7.25 per hour and keep all tips above that amount without having to tell customers what happened.

new study from the Restaurant Opportunities Centers United and the National Employment Law Project shows that waiters and bartenders earn more in tips than they do from their base hourly wage. The median share of hourly earnings they make from tips makes up nearly 59% of waitstaff earnings and 54% of bartenders’ earnings. Allowing employers to take much or all of that tipped income would be a major blow to many working in the restaurant and bar industry.

Workers in these fields are already poorly compensated. A recent study by the Economic Policy Institute and the University of California, Berkeley, found that “median hourly earnings for waiters and bartenders are a meager $10.11 per hour, including tips. That is just $2.86 above the current federal wage floor and far below what workers throughout the country need to make ends meet.”

While proponents of the change suggest that businesses might use the tips to give workers more hours or to subsidize non-tipped employees, but with no requirement for such use of the tipped wages, employers could use them in any way they see fit. EPI analysis found that the new rule would transfer $5.8 billion from workers to employers.

Read the full report.

Labor Department Proposes Legalizing Wage Theft

Friday, December 8th, 2017

The Labor Department is moving quickly to establish a new rule that would make tips the property of restaurant owners instead of workers.

This week, President Donald Trump’s administration proposed getting rid of an existing rule that makes tips the property of servers that restaurant owners cannot take away.

Under the new proposal, restaurant owners who pay their employees as little as $7.25 per hour could do whatever they want with tips left by customers for waitstaff. Restaurant owners could even keep the tips for themselves.

The federal minimum cash wage for tipped workers—at just $2.13 per hour—is already lower than for other workers. This low subminimum wage means that tipped workers depend on tips for virtually all their take-home pay after taxes, so they receive their take-home pay directly from customers. Not surprisingly, tipped workers have higher rates of poverty, discrimination and sexual harassment. Undocumented and immigrant workers in the restaurant industry are particularly vulnerable to wage theft.

The administration’s proposal would take money out of the pockets of some of the lowest-paid workers in our country and hand it over to restaurant owners, many of them big corporations.

Does that sound familiar? This is the same kind of reverse Robin Hood scheme as the disgraceful tax bill now making its way through Congress.

We cannot let them get away with this. The administration is trying to sneak this change through without hearing from workers, customers or even employers who disagree at a time of year when tipped workers are the busiest. The deadline for comments on this proposal is Jan. 4, 2018.

This blog was originally published at AFL-CIO on December 8, 2017. Reprinted with permission. 

About the Author: Kelly Ross is the deputy policy director at the AFLCIO.

With All Eyes on DACA, the Trump Administration Is Quietly Killing Overtime Protections

Thursday, September 7th, 2017

On September 5, the administration of Donald Trump formally announced that they won’t try to save Obama’s overtime rule, effectively killing a potential raise for millions of Americans. This disturbing development has largely slipped under the radar during a busy news week, marked by Trump’s scrapping of the Deferred Action for Childhood Arrivals (DACA) program.

Twenty-one states and a number of business groups sued the Obama administration last September, after the Department of Labor (DOL) announced the new rule, accusing the former president of overreach.

That lawsuit led to Amos Mazzant, a federal Obama-appointed judge in Texas, putting the rule on hold last November, shortly before it was set to become law. On August 31, Mazzant struck the rule down, and—less than a week later—Trump’s Department of Justice (DOJ) declined to challenge the District Court’s decision. In a court filing, a DOJ lawyer said that the administration would not appeal.

The Obama administration’s rule would have raised the overtime salary threshold considerably. The threshold hadn’t been increased by any administration to adequately reflect wage growth or inflation, which means that many workers only see overtime pay if they make less than about $23,660 a year. Obama had scheduled that number to be bumped up to about $47,476 after reviewing 300,000 comments on the subject.

“The overtime rule is about making sure middle-class jobs pay middle-class wages,” former Labor Secretary Tom Perez told reporters on a call after the rule was announced in May 2016. “Some will see more money in their pockets … Some will get more time with their family … and everybody will receive clarity on where they stand, so that they can stand up for their rights.”

While the overtime rule faced predictable opposition from Republicans and business groups, it also received backlash from some liberal advocacy organizations. In May 2016, U.S. PIRG, the popular federation of non-profit organizations, released a statement criticizing Obama’s decision. “Organizations like ours rely on small donations from individuals to pay the bills. We can’t expect those individuals to double the amount they donate,” said the group.

Critics of the statement pointed out that U.S. PIRG’s opposition suggests they have employees not being paid for overtime despite their low wages. The group was slammed by progressives for supporting a regressive policy when it benefited their economic interests.

The DOL claimed that the rule would mean a pay increase for about 4.2 million Americans, but the Economic Policy Institute (EPI) contends that the DOL’s figure is far too low. According to EPI, the DOL’s analysis fails to take the impact of George W. Bush’s overtime policies into account and relies heavily on statistics that were generated before he took power. EPI estimates that, because of changes to employee classifications in 2004, roughly 6 million workers had their right to overtime destroyed.

The EPI’s study of the overtime rule determined that about 12.5 million workers would have been impacted if it had been implemented. A wide range of workers would have potentially seen a pay increase, including 6.4 million women, 1.5 million African Americans and 2.0 million Latinos, the EPI concludes.

“Once again, the Trump administration has sided with corporate interests over workers, in this case, siding with business groups who care more about corporate profits than about allowing working people earn overtime pay,” Heidi Shierholz, who leads the EPI’s Perkins Project on Worker Rights and Wages, told In These Times.

The Trump administration’s move might be disappointing for workers’ rights advocates, but it’s hardly surprising. As a presidential candidate in 2016, Trump vowed to kill the overtime rule if elected. “We have to address the issues of over-taxation and overregulation and the lack of access to credit markets to get our small business owners thriving again,” he said in an interview. “Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that.”

While many pundits have focused on Trump’s unrelenting series of failures and scandals, his administration has quietly waged a fairly successful war on labor. In addition to nixing one of Obama’s most notable policy achievements, the Trump administration is also poised to stack the National Labor Relations Board with a pro-business majority, has proposed major cuts to the Labor Department and has rolled back safety protections for workers.

Last month, Bloomberg reported that Trump’s Labor Department had created an office specifically designed to reconsider government regulations. The office will be run by Nathan Mehrens, the anti-union lawyer who is also in charge of the department’s policy shop.

Trump geared much of his campaign rhetoric toward the U.S. worker, vowing to dismantle exploitative trade agreements and bring back jobs. However, his administration has simply emboldened the anti-labor forces that have dictated economic policy for decades.

This blog was originally published at In These Times on September 7, 2017. Reprinted with permission. 

About the Author: Michael Arria covers labor and social movements. Follow him on Twitter: @michaelarria

When the Parades Are Over, Who Stands With Unions?

Wednesday, September 6th, 2017

The Labor Day parades are over. The bands have packed up. The muscular speeches celebrating workers are finished. The trash is getting collected from parks across the country.  And now conservative politicians from Trump on down will revive their systematic efforts to weaken unions and undermine workers.

Trump – despite all the populist bunting that decorates his speeches – sustains the deeply entrenched Republican antipathy to organized workers. Their attack is relentless.

Trump’s budget calls for deep cuts in the Labor Department, eviscerating job training programs and cutting – by 40 percent – the agency that does research on workplace safety. It would eliminate the program that funds education of workers on how to avoid workplace hazards. It even savages money for mine safety enforcement for the miners Trump claims to love.

Trump is systematically reversing any Obama rule that aided workers. He signed legislation scrapping the rule that required federal contractors to disclose violations of workplace safety and employment and anti-discrimination laws. His Labor Secretary has announced his intention to strip millions of workers of the overtime pay they would have received under Obama DOL regulations.

Trump is creating a pro-business majority at the National Labor Relations Board, which will roll back Obama’s efforts to make it easier for workers to organize, and make it possible to hold home companies responsible for the employment practices of their franchisees.

The GOP’s Anti-Union Strategy

This is simply standard operating procedure for today’s Republican party. Long ago, Republicans realized that organized labor was a central “pillar,” as Grover Norquist described it, of Democratic Party strength. Now Republican office holders at every level – from county officials to statehouses to judges – know that their job is to weaken labor unions. From right to work laws to administrative regulations to court challenges, Republicans sustain an unrelenting attack.

And aided by our perverse globalization strategies, they’ve been remarkably successful. Unions are down to about 7 percent of the private workforce. Public employee unions, a relative stronghold, are facing court challenges – essentially allowing workers to enjoy the benefits of union negotiations without paying dues — that will decimate their membership.

True conservatives would embrace unions. They are a classic “mediating institution,” a voluntary civic organization between government and the individual. Unions increase the voice and power of workers in the workplace, helping to keep executive accountable, and to protect workers from abuse. They also educate their members, teach democracy, and are central to community volunteer and service efforts. They teach and practice democratic citizenship.

The modern Republican Party, of course, is the party of big business and big money. It isn’t conservative; it is partisan. And weakening unions is a constant target.

While Republicans understand how important unions are to Democrats and to workers, Democrats don’t seem to get it. Sure, they line up to get union donations; most will vote to defend unions and worker programs. But as the money in politics has gotten bigger and the unions have gotten weaker, the Wall Street wing of the Democratic Party has become more powerful.

The result is clear. When Republicans get control, they attack unions relentlessly. When Democrats gain control, as they did in 2012 with the election of Barack Obama and Democratic majorities in both houses, labor law reform, empowering workers to organize is not a priority. Obama essentially told unions that if they could get the votes, he’d sign the law, but he wasn’t leading the charge. And so as under Carter and Clinton, changing the law to make it easier for workers to organize and bargain collectively didn’t happen.

Unions Under Siege

Now unions are under siege. Yet it is hard to imagine how a small “d” democracy can be robust, or a large D Democratic Party can regain its mojo without a revived movement of workers. It’s time for Democrats at every level to realize: strengthening workers and their unions isn’t an elective; it’s a requirement and a first priority.

The loop works like this: Unions are in decline. As a result, unions lose influence inside the Democratic Party. The Democrats then feel no pressure to stem unions’ decline, and the economically disadvantaged lose what was once their most powerful advocate. Then the cycle continues. We cannot revive unions, and we have no template for egalitarian politics without them.

Unions aren’t simply economic actors. They’re political actors. Labor still needs the Democrats. The Democrats, more than they realize, still need labor. But most of all, all those who want to build a fairer society need their partnership.

Republican elites understand the doom loop. Big business, small business, and Tea Party alike have pushed hard against unions. As the parties have polarized, Republicans have taken the gloves off, risking the votes of the 40 percent of union members who back Republicans in order to crush a pillar of the Democratic coalition. Even President Bernie Sanders would have real trouble rebuilding unions in the face of a Republican Congress and a federal judiciary eager to swat down pro-labor executive action.

Even without Republican politicians digging their graves, labor unions face deep challenges. In the private sector, unions must sign contracts workplace by workplace. Gawker writers here and home-care workers there will continue to organize their workplaces, but the barriers remain dauntingly high. In the public sector, unions have stood steady. But cops and teachers alike face blowback for putting their own prerogatives above the public interest. And if the Supreme Court bans the collection of agency fees in the public sector (thus imposing “right to work”), public-sector union membership could halve in a decade.

This blog was originally published at OurFuture.org on September 5, 2017. Reprinted with permission. 

About the Author: Robert Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. The organizations were launched by 100 prominent Americans to develop the policies, message and issue campaigns to help forge an enduring majority for progressive change in America. Mr. Borosage writes widely on political, economic and national security issues. He is a Contributing Editor at The Nation magazine, and a regular blogger at The Huffington Post. His articles have appeared in The American Prospect, The Washington Post,Tthe New York Times and the Philadelphia Inquirer. He edits the Campaign’s Making Sense issues guides, and is co-editor of Taking Back America (with Katrina Vanden Heuvel) and The Next Agenda (with Roger Hickey).

Labor Department wants to reward financial advisors at the expense of consumers

Thursday, August 10th, 2017

The Labor Department would like to delay a rule that would require financial advisors to act in the best interest of their customers and their retirement accounts.

The federal court filing, made on Wednesday, said the department wants to delay implementation of the rule to July 2019. The full implementation of the rule is currently set for January 2018.

In February, President Donald Trump ordered a review of the Obama-era regulation. Financial companies and lobbyists representing them have opposed the rule. On the same day of the order, White House advisor Gary Cohn, who is a former Goldman Sachs executive, told the Wall Street Journal he thought it was a “bad rule.” Congress has introduced bills trying to kill the rule on multiple occasions.

Right now, there are two standards investors must be aware of — the fiduciary standard and suitability standard. A financial advisor operating under what is called the “suitability standard” is only required to make sure a client’s investment is suitable for the client’s finances, age, and risk tolerance at that point in time, but they don’t have a great legal obligation to monitor the investment for the client.

But under the fiduciary standard, an advisor has to keep monitoring the investment as well as the customer’s overall financial picture. Under the fiduciary standard, advisors also must disclose all of their conflicts of interest, fees, and commissions. Essentially, this makes it more difficult for advisors to push investments that will make them money but may not be in the best interest of their clients.

Retirement plans have changed a lot since the 1970s, when more private workers were enrolled in defined-benefit plans funded by their employers that promised a certain monthly benefit once they retired. Now more people have defined-contribution plans, which don’t promise a specific benefit for people when they retire, requiring them to contribute money to an account they are responsible for. Only 10 percent of workers older than 22 have a traditional pension and only 6 percent of Millennials do. Most workers have to choose how to invest these contributions and manage their own retirement savings but most Americans aren’t knowledgeable on investment decisions.

A 2016 Prudential Investments survey of more than 1,500 Americans showed 42 percent of Americans surveyed didn’t know how their assets were allocated in their portfolios, and 40 percent said they didn’t know how to prepare for retirement. Investment terms are often difficult to understand and investors may be overwhelmed by choices.

The financial industry argument against the rule is essentially that a commission system is necessary to pay for financial advice for the average investor, despite the adverse incentives it creates. Gary Burtless, an economist and senior fellow at the Brookings Institution, has disputed this argument.

“This claim does not seem terribly compelling. There are alternative ways to compensate financial advisors that do not create an obvious conflict between the interests of advisors and retirement savers,” Burtless writes.

The financial industry tried to persuade the public that investors were up in arms over the rule. The Financial Services Institute claimed that consumers sent over 100,000 letters with opinions on the rule. But Money reviewed 100 of the letters FSI claimed were from investors, and found that 64 percent came from financial advisors and people involved in financial companies.

The Trump administration would have to jump through numerous hoops to reverse the progress made on the rule, however, just as Obama officials did when they first wanted to advance the rule. The final rules were issued last year, but first the department took thousands of public comments, held four days of hearings, and 100 stakeholder meetings. The administration would have to field all of these comments and go through this process again to justify whatever changes it would make. It took about six years for the Obama administration to advance the fiduciary rule.

This article was originally published at ThinkProgess on August 10, 2017. Reprinted with permission.

About the Author: Casey Quinlan is a policy reporter at ThinkProgress. She covers economic policy and civil rights issues. Her work has been published in The Establishment, The Atlantic, The Crime Report, and City Limits.

Trump has bad news for millions of workers in line for overtime pay under Obama

Friday, July 28th, 2017

Donald Trump’s major life goal at this point seems to be rolling back everything good President Barack Obama did for the country and its people—and now he’s coming for your overtime pay. Obama had sought to raise the overtime eligibility threshold to include millions more workers, a change that was supposed to go into effect in December but was blocked at the last minute by a judge. Now, of course—of course—Mr. Populist is rolling back Obama’s expansion. Trump’s Labor Department announced Tuesday that it would be doing something to the overtime eligibility threshold, but it’s not clear what, and they’re definitely not going to be raising the threshold to $47,000 like Obama proposed.

In the final days of the Obama administration, the Labor Department had appealed the judge’s decision blocking implementation of the raise, and Trump’s Labor Department agreed in court that it has the power to set the eligibility threshold. But Labor Secretary Alexander Acosta plans to use that power in a very different way than Tom Perez did under Obama:

On Tuesday, the department said in light of the pending appeal, it decided to issue a request for comments rather than skip immediately to rescinding or revising the rule.

The agency asked for input on whether the current threshold of $23,660 set in 2004 should be updated for inflation, and whether there should be multiple levels based on region, employer size, industry or other factors. […]

The department also asked employers to explain how they prepared for the rule to take effect and whether it has had an outsize impact on small businesses and particular industries.

The department said it was considering eliminating the salary threshold, leaving overtime eligibility to be based on workers’ job duties.

Mind you, the Obama administration already had a lengthy comment period and took 300,000 comments. But we know the Trump regime will be listening to comments from one set of people in particular: bosses who want to exploit their workers.

This blog was originally published at DailyKos by Laura Clawson on July 26, 2017. Reprinted with permission.

About the Author: Laura Clawson is labor editor at DailyKos.

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