Lawmaker seeks ban on tip credits

RENAISSANCE MAN: Joe L. DeFrancesco, a former Renaissance Providence employee,  inspired a bill banning establishments from taking “tip credits.” / PBN PHOTO/RUPERT WHITELEY
RENAISSANCE MAN: Joe L. DeFrancesco, a former Renaissance Providence employee, inspired a bill banning establishments from taking “tip credits.” / PBN PHOTO/RUPERT WHITELEY

The next time you leave a tip at your favorite bar, restaurant or hotel, be warned that all the money you leave your server might not be headed in their pocket. Rep. Christopher R. Blazejewski, D-Providence, is intent on changing that.
Blazejewski has proposed a bill banning establishments from taking “tip credits” out of tips left for wait staff. “My district in Fox Point has a lot of college students and working-class people that have to work more than one job. They have frequently told me that they have had some, or all, of their tips taken from them,” he said. “This bill does two things: It prevents tips from being taken from waiters and waitresses that have earned them. It also prevents fraud on the patrons that pay those tips and have the reasonable expectation that the tips reward the wait staff for good service.”
The bill not only seeks to clarify Rhode Island law but is also stricter than what is currently allowed by the U.S. Department of Labor.
In Rhode Island, wait staff must be paid at least a minimum wage of $2.89 per hour. According to the law, employers are allowed to keep the difference between the minimum wage of $7.40 and the wage of $2.89, or $4.51 per hour from the employees’ tips.
Many restaurants and companies in the service industry simply allow their employees to keep their entire tips, however some follow this tip-credits practice. Taking more is not allowed by federal law, even if the worker is paid a full hourly minimum wage, $7.40 in the Ocean State.
The bill allows for individuals to keep their tips and service charges, or for members of a wait staff – waiters, waitresses, bus boys, bartenders and the like – to pool the money. It prohibits others, such as floor managers, to remove funds from tips, pooled or not. Also, in cases where a credit card is used, credit card usage fees cannot be taken from the tip and it is to be given to the wait staff on the same business day. “Wait staff are usually paid less than [the standard] minimum wage, so tips are the way people make their living,” Blazejewski said.
The bill puts forward many conditions that are currently required by the Department of Labor. Those regulations took effect on June 5, 2011, but they are being challenged. The National Restaurant Association, the Council of State Restaurant Associations and the National Federation of Independent Businesses filed suit against the department seeking to block their enforcement. Passage of the bill would ensure that its conditions would become state law, even if the restaurant association wins its case. The legislation is modeled after similar laws in Massachusetts, California and New York.
On Feb. 13, a Massachusetts Superior Court judge ruled a “no-tipping” policy in place at 125 Dunkin’ Donuts franchises owned by The Scrivanos Group was not a wage-act violation.
According to the suit, the company required that any tips left on the counter be returned to customers. If the money could not be returned, the employee was required to put the money in the register where it was kept by management; as a result the employees sued. The judge ruled that the owner was within their right to enforce a no-tipping policy but also said that if it can be shown that management keeps tips that customers believe are going to employees, it would violate the current law.
Blazejewski said he was spurred to file the legislation partly by the case of Joe L. DeFrancesco of Providence, who worked in room service at the Renaissance Providence. “They had a really convoluted tipping system, both the hotel and our supervisors were stealing our tips. Less than half of it was entering our pockets at the end of the day,” he said. He filed a complaint with the U.S. labor department and after investigation was told the practice was legal as long as he was earning the equivalent of minimum wage from a combination of tips and wages. He was being paid $5.50 per hour, and including the portion of tips he was allowed to keep, his wage became slightly more than minimum wage, thus the practice was legal.
Upon quitting the hotel job he created a website, joeyquits.com, where service workers across the nation can share similar experiences. His opposition to the practice of tip credits, which he refers to as “tip stealing,” led him to cross paths with Blazejewski.
Dale J. Venturini, president and CEO of the Rhode Island Hospitality Association, says the vast majority of local eateries follow the law on tips.
Violations of the proposed law would be misdemeanors punishable by fines of up to $1,000 and 60 days in prison, as well as restitution with an interest rate of 12 percent. The bill also allows civil action by aggrieved employees, who have up to three years to file for lost wages, benefits and for litigation and attorneys’ fees.
“That’s pretty hard-hitting,” said Venturini, whose association has not taken a position on the bill. “People who are breaking the law should be reported. … My biggest issue is that this is not industry-wide. We represent a very generous industry.” •

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