Bill Overview
Title: Tipped Employee Protection Act
Description: This bill modifies the definition of a tipped employee under the Fair Labor Standards Act of 1938 to exclude consideration of an employee's duties when determining the combined amount of tips and direct wages an employee receives for the purpose of an employer meeting the minimum wage requirements. Under the bill, an employer may pay a tipped employee the tipped minimum wage for tasks that are not related to tipped work as long as the employee's combined tips and direct wages total at least the $7.25 federal minimum wage. Current Department of Labor rules prohibit an employer from paying the tipped minimum wage for tasks that are not related to tipped work.
Sponsors: Sen. Braun, Mike [R-IN]
Target Audience
Population: Tipped employees worldwide
Estimated Size: 4000000
- The bill affects tipped employees, who typically work in industries like food service, hospitality, and personal services, where tipping is a significant part of their compensation.
- This change could affect tipped workers worldwide, but primarily impacts those within the United States since it modifies a U.S. federal act.
- Globally, there are millions of workers in occupations that involve tips, though the specifics of tipping and legal protections vary greatly by country.
Reasoning
- The target population is primarily tipped employees in the United States, which include workers in restaurants, bars, hotels, and personal service industries.
- Some workers may benefit more quickly if their employers opt to pay less for side work not involving tips, possibly affecting their overall payments if combined wages meet federal minimum wage.
- Those with a significant portion of their income coming from tips might see less effective compensation depending on employer practices.
- Not all employees might feel the impact of this policy due to their varied tipping and wage dynamics.
- The policy's financial budget will likely cover educational resources for employers and auditing to ensure compliance.
Simulated Interviews
Waitress at a high-end restaurant (Los Angeles, CA)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I'm concerned that my employer might start paying me the tipped minimum wage for tasks where I don't earn tips.
- I rely on my tips to cover my living expenses and college tuition.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 7 | 8 |
Bartender at a popular downtown bar (Chicago, IL)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- As long as I earn enough to meet the minimum wage, I don't mind the change.
- I'm used to working for tips, but I worry about the consistency of my income now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 9 |
Hotel Concierge (Miami, FL)
Age: 28 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- Honestly, I don't think this will impact me very much.
- My main income is not dependent on tips.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Chef in a small restaurant (New Orleans, LA)
Age: 40 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I worry about being underpaid for tasks that aren't directly related to tips.
- It's unfair if my side tasks aren't compensated properly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 4 | 5 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 6 |
| Year 10 | 6 | 7 |
| Year 20 | 7 | 8 |
Barista at a coffee shop (NYC, NY)
Age: 19 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- This change might actually make my job more stable.
- It's good to know my base isn't purely tips-dependent.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Tour guide (Austin, TX)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 7/20
Statement of Opinion:
- I think this could standardize how payment is handled for tipped workers like me.
- It might lessen the volatility of my income.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 9 | 9 |
Casino dealer (Las Vegas, NV)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I'm concerned about potential losses in income.
- As long as tips cover the minimum wage, it might not be so bad.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 9 |
Theme park performer (Orlando, FL)
Age: 33 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 1.0 years
Commonness: 6/20
Statement of Opinion:
- I think this policy could help those in roles similar to mine, but I am not highly affected.
- The policy might encourage fairer pay practices across the board.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Hotel housekeeping manager (Boston, MA)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 4/20
Statement of Opinion:
- It's really a matter of how the hotels handle the new regulations.
- For workers below me, it might mean more equitable compensation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 8 |
Nail salon technician (San Francisco, CA)
Age: 31 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 11/20
Statement of Opinion:
- I might lose some income stability depending on how this policy plays out.
- Either way, my service will still highly rely on tips.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $8000000)
Year 2: $5000000 (Low: $3000000, High: $8000000)
Year 3: $5000000 (Low: $3000000, High: $8000000)
Year 5: $5000000 (Low: $3000000, High: $8000000)
Year 10: $5000000 (Low: $3000000, High: $8000000)
Year 100: $5000000 (Low: $3000000, High: $8000000)
Key Considerations
- The volume of tipped employees affected across the US and how employers adjust labor force strategies may influence overall economic impact.
- The overall impact hinges on the balance between employer cost savings from reduced compliance burdens and changes in worker incomes.