Madigan: Let Illinois Workers Keep Their Tips

Lawndale News Chicago's Bilingual Newspaper - Business

Attorney General Lisa Madigan filed comments in opposition to a proposal by the federal government that would rescind a rule protecting hourly workers’ tips. Madigan and the attorneys general from California and Pennsylvania led a coalition of 17 attorneys general in filing the comments with the U.S. Department of Labor against the Department’s proposed rescission of the 2011 rule. The rule had clarified that tips earned are the sole property of employees in all circumstances. Under the Department’s proposed rule change, employers would be allowed to keep tips earned by employees who are paid the federal minimum wage – currently $7.25 per hour. In Illinois, an estimated half a million workers could see their tips taken by the federal government’s action, according to the Bureau of Labor Statistics. Nationwide, the Economic Policy Institute estimated it could result in employers taking up to $5.8 billion of workers’ earned tips.

Lawndale News Chicago's Bilingual Newspaper - BusinessThe proposal could also have a disproportionate impact on women, as the National Women’s Law Center reports that over 65 percent of tipped workers in Illinois are women. Women in tipped occupations also experience a high wage gap in Illinois, making 84 cents for every dollar their male counterparts make. In addition, 17 percent of Illinois women in tipped occupations are living in poverty. Under the Fair Labor Standards Act (FLSA), employers are required to pay their hourly employees the federal minimum wage. Employers can meet this requirement either by paying employees the full cash federal minimum wage or by paying a lower cash wage, no less than $2.13 per hour, and making up the difference with the tips that the employee earns. The latter practice is known as a “tip credit.” The Department’s proposed rescission of the 2011 rule would allow employers who pay employees the federal minimum wage to take the employees’ tips.

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