New Jersey Workers Could Lose $120M a Year in Tips Under Trump Proposal

This blog post originally had the annual lost wages at $21 million. The error was corrected and the post updated on January 24.

New Jersey workers stand to lose $120 million in tips a year under a proposed federal Department of Labor (DOL) rule making it legal for employers to pocket their workers’ tips as long as they pay those workers the minimum wage, according to a new report released this week by the Economic Policy Institute (EPI).

This is the 13th highest dollar amount of all 50 states.

The proposed “tip-stealing” rule, which was unveiled in December, rescinds portions of longstanding DOL regulations that prohibit employers from taking tips. If the rule is finalized, workers across the country will lose $5.8 billion in tips every year, according to EPI’s estimates. Women – who are more likely than men to work for tips and to earn lower wages when doing so – will be harmed the most, losing a full 80 percent of that $5.8 billion.

This new rule opens the door to further exploitation of tipped workers, who are already among the most vulnerable employees in today’s workforce. Tips are meant to be a supplement to earnings that recognize quality service. Allowing employers to withhold tips earned by their employees is wrong and invites behavior tantamount to wage theft.

New Jersey has an estimated 140,000 tipped workers, and these workers are more likely than non-tipped workers to live in poor households and lack any type of health insurance. (For more background on tipped workers in New Jersey, see NJPP’s 2014 report: