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

This proposed rule opens the door to further exploitation of tipped workers.

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Published on Jan 19, 2018 in Economic Justice

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: http://www.njpp.org/assets/reports/NJPPtippedminimumJuly2014.pdf).

Author

  • Brandon McKoy, President, is the chief executive of NJPP and leads the organization's efforts in shaping policy debates to advance economic justice for the many, not a chosen few. Prior to being named President of NJPP in February 2019, Brandon served as NJPP's Director of Government and Public Affairs, where he designed and implemented the organization's outreach, advocacy, and government relations activities. He also produces timely, credible and accessible research and analysis on issues including, but not limited to, economic security, the social safety net and economic opportunity.

    Brandon’s research interests include: state tax policy, the minimum wage, paid sick leave, the earned income tax credit, urban planning and criminal justice.

    Before joining NJPP in August 2014 as a national fellow under the State Priorities Partnership’s and Center on Budget and Policy Priorities’ state policy fellowship program, Brandon worked as a Program Associate at The Fund for New Jersey, where he assisted in grantmaking on public policy issues that particularly affect low-income and minority populations in New Jersey. He also worked as an AmeriCorps VISTA at HANDS, Inc., a community development corporation in New Jersey, where he worked to mitigate the negative impact of foreclosures and increase citizen participation in local decision-making.

    Brandon formerly served as the Deputy Chapter Director of New Leaders Council – New Jersey and is an alumnus of the 2013 fellows class. He currently serves on the board of the New Jersey Work Environment Council, Shelterforce and the I Am Trenton Community Foundation. He received a MA in City & Regional Planning and Policy Development from Rutgers University’s Edward J. Bloustein School of Planning and Public Policy and holds a BS degree in Social Psychology from The College of New Jersey.

    Email: mckoy (at) njpp.org | Phone: 609-393-1145 ext. 14


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