Tips/Service Charges Draft Administrative Policy (Version 2)

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On November 8, 2016, Washington voters passed Initiative 1433. The initiative created new requirements in the Washington Minimum Wage Act (RCW 49.46.020(3)) for employers to pay tips, gratuities, and service charges to employees. Rules addressing the enforcement of these requirements (found in WAC 296-128-820) were finalized on December 19, 2017.

To help employers implement these requirements, and to help workers understand their rights, L&I is developing an administrative policy which provides additional clarification. In August 2018, the department circulated an initial draft version of the administrative policy and solicited feedback from stakeholders.

The department reviewed the comments submitted, and identified additional updates to the administrative policy draft. As a follow-up to those edits, the department is circulating a second version of the draft administrative policy (Español) for stakeholders to review and provide feedback.

We are asking the public to review the second version of the draft administrative policy by January 7, 2019.

Feedback can be submitted directly to this page via the “Submit Comments” tab, or using an attached document via the “Upload Documents” tab.

Feedback can also be submitted via the ESRules@Lni.wa.gov email box. Feedback submitted to the email box will be uploaded to this engagement site.

On November 8, 2016, Washington voters passed Initiative 1433. The initiative created new requirements in the Washington Minimum Wage Act (RCW 49.46.020(3)) for employers to pay tips, gratuities, and service charges to employees. Rules addressing the enforcement of these requirements (found in WAC 296-128-820) were finalized on December 19, 2017.

To help employers implement these requirements, and to help workers understand their rights, L&I is developing an administrative policy which provides additional clarification. In August 2018, the department circulated an initial draft version of the administrative policy and solicited feedback from stakeholders.

The department reviewed the comments submitted, and identified additional updates to the administrative policy draft. As a follow-up to those edits, the department is circulating a second version of the draft administrative policy (Español) for stakeholders to review and provide feedback.

We are asking the public to review the second version of the draft administrative policy by January 7, 2019.

Feedback can be submitted directly to this page via the “Submit Comments” tab, or using an attached document via the “Upload Documents” tab.

Feedback can also be submitted via the ESRules@Lni.wa.gov email box. Feedback submitted to the email box will be uploaded to this engagement site.

Guest Book

To submit your feedback directly to this page, please enter your comments in the text box below.

(Submitted on 1/4/19 by Daniel Abbott, Daniel Anderson, Katherin Balles, Noel Barnes, Faye Bartlett, Phillip Bernhardt-House, David Blair, Frances Blair, Tika Bordelon, Robert Brown, Heidi Colkitt, Lauren Collins, Howard Cherrington, Diane DiPrete, Gary Dirks, Nancy Ellingham, Kristin Felix, Sharon Fetter, Tami Fosmark, Sanja Futterman, James Giles, Jess Grady-Benson, Gwendolyn Harper, Shirley Harper, Jo Harvey, Leann Hawthorne, Percy Hilo, Dale F. Johnson, Richard Johnson, Donald Lahti, Candace Laporte, Erik LaRue, Charlene Lauzon, Ray Lou, Sammy Low, Kim McDonald, Peter Michaels, James Mulcare, Michelene-MyKuh Manion, Kate O'Brien, Francisco Ocampo, Adina Parsley, Giulia Pasciuto, Gregory Penchoen, Sandra Perkins, Gigi Pomerantz, N. Quiban, Dave Roehm, Roseanne Rohrer, John S., Raeann Scott, Kimberly Seater, Baker Smith, Sandra Smith, Lori Stefano, David Stetler, Summer Stevens, Tonya Stiffler, Diane Sullivan, Caren Taylor, Cornelia Teed, Brian Venable, Jason Weinstock, Carla Wiechman, and Joe Wiederhold)

Dear Director Joel Sacks,

Thank you for the time and attention you and your team have dedicated to the Tips/Service Charges Draft Policy, and for responding to past public comments in this latest draft by clarifying L&I's enforcement authority over local ordinances, and strengthening protections for tipped workers required to contribute excessively to mandatory tip pools.

However, individuals working in cities with higher minimum wage ordinances continue to be left without clear guidance on their rights to tips and service charges. We ask that you further clarify protections for all Washington workers from tip and service charge theft, and to align with the state law voters approved under I-1433, I call upon the Department of Labor to revise the Tips/Service Charges Draft Policy as follows:

1) Clearly state that I-1433’s provision “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.” is applicable to all Washington workers, including workers in cities with higher minimum wage laws like SeaTac, Seattle and Tacoma; and

2) Include examples of tip and service charge violations from the higher minimum wage cities of SeaTac, Seattle, and/or Tacoma, in order to best inform workers in these cities of their rights and ensure employers are in compliance.

As an appointed official, I trust that you will do right thing...

Allison Drake almost 3 years ago

(Submitted on 1/4/19 by Jack Stansfield)

Dear Director Joel Sacks,

Thank you for the time and attention you and your team have dedicated to the Tips/Service Charges Draft Policy, and for responding to past public comments in this latest draft by clarifying L&I's enforcement authority over local ordinances, and strengthening protections for tipped workers required to contribute excessively to mandatory tip pools.

However, individuals working in cities with higher minimum wage ordinances continue to be left without clear guidance on their rights to tips and service charges. We ask that you further clarify protections for all Washington workers from tip and service charge theft, and to align with the state law voters approved under I-1433, I call upon the Department of Labor to revise the Tips/Service Charges Draft Policy as follows:

1) Clearly state that I-1433’s provision “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.” is applicable to all Washington workers, including workers in cities with higher minimum wage laws like SeaTac, Seattle and Tacoma; and

2) Include examples of tip and service charge violations from the higher minimum wage cities of SeaTac, Seattle, and/or Tacoma, in order to best inform workers in these cities of their rights and ensure employers are in compliance.

As an appointed official, you have an obligation do right thing.

Allison Drake almost 3 years ago

(Submitted on 1/4/19 by Nena Dunn)

Dear Director Joel Sacks,

Thank you for the time and attention you and your team have dedicated to the Tips/Service Charges Draft Policy, and for responding to past public comments in this latest draft by clarifying L&I's enforcement authority over local ordinances, and strengthening protections for tipped workers required to contribute excessively to mandatory tip pools.

However, individuals working in cities with higher minimum wage ordinances continue to be left without clear guidance on their rights to tips and service charges. We ask that you further clarify protections for all Washington workers from tip and service charge theft, and to align with the state law voters approved under I-1433, I call upon the Department of Labor to revise the Tips/Service Charges Draft Policy as follows:

1) Clearly state that I-1433’s provision “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.” is applicable to all Washington workers, including workers in cities with higher minimum wage laws like SeaTac, Seattle and Tacoma; and

2) Include examples of tip and service charge violations from the higher minimum wage cities of SeaTac, Seattle, and/or Tacoma, in order to best inform workers in these cities of their rights and ensure employers are in compliance.

When I tip a server, I am thanking them, not their employer, for good service. When I was a server in CT 50 years ago, I got to keep my tips, which were always in cash, but management made assumptions (that were erroneous) about how much I made in tips and subtracted their imagined amount from my paycheck. I have never forgotten and I fully support today’s restaurant workers to get to keep all their tips in addition to their hourly wages.

Thank you.

Allison Drake almost 3 years ago

(Submitted on 1/4/19 by Anne Hepfer)

Dear Director Joel Sacks,

Thank you for the time and attention you and your team have dedicated to the Tips/Service Charges Draft Policy, and for responding to past public comments in this latest draft by clarifying L&I's enforcement authority over local ordinances, and strengthening protections for tipped workers required to contribute excessively to mandatory tip pools.

However, individuals working in cities with higher minimum wage ordinances continue to be left without clear guidance on their rights to tips and service charges. We ask that you further clarify protections for all Washington workers from tip and service charge theft, and to align with the state law voters approved under I-1433, I call upon the Department of Labor to revise the Tips/Service Charges Draft Policy as follows:

1) Clearly state that I-1433’s provision “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.” is applicable to all Washington workers, including workers in cities with higher minimum wage laws like SeaTac, Seattle and Tacoma; and

2) Include examples of tip and service charge violations from the higher minimum wage cities of SeaTac, Seattle, and/or Tacoma, in order to best inform workers in these cities of their rights and ensure employers are in compliance.

As an appointed official, I trust that you will do right thing. I hope that you will follow through with enforcing the policy that the legislature has created to make sure that all people will be able to thrive in this economy.

Allison Drake almost 3 years ago

(Submitted on 1/4/19 by Carol Sibley)

Dear Director Joel Sacks,

Thank you for the time and attention you and your team have dedicated to the Tips/Service Charges Draft Policy, and for responding to past public comments in this latest draft by clarifying L&I's enforcement authority over local ordinances, and strengthening protections for tipped workers required to contribute excessively to mandatory tip pools.

However, individuals working in cities with higher minimum wage ordinances continue to be left without clear guidance on their rights to tips and service charges. We ask that you further clarify protections for all Washington workers from tip and service charge theft, and to align with the state law voters approved under I-1433, I call upon the Department of Labor to revise the Tips/Service Charges Draft Policy as follows:

1) Clearly state that I-1433’s provision “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.” is applicable to all Washington workers, including workers in cities with higher minimum wage laws like SeaTac, Seattle and Tacoma; and

2) Include examples of tip and service charge violations from the higher minimum wage cities of SeaTac, Seattle, and/or Tacoma, in order to best inform workers in these cities of their rights and ensure employers are in compliance.

This is a question of fairness and as an appointed official, I trust that you will do right thing...

Allison Drake almost 3 years ago

Thank you for the opportunity to review and comment on the Tips/Service Charges v2 Draft Administrative Policy. Unfortunately, the "Upload Documents" tab doesn't allow for multiple attachments, so I will be submitting formal comments on behalf of Restaurant Opportunities Center Seattle (ROC-Seattle) via email today. Pasted below are our main comments.. please reattach our comments along with Appendices A-C sent via email.
Sincerely,
Elena Perez
Director, ROC-Seattle
_______________________________________________________________________
January 7, 2019



Mr. Joel Sacks
Director
Department of Labor and Industries
Labor and Industries Building
P.O. Box 44001
Olympia, Washington 98504-4001


Dear Mr. Sacks,

Restaurant Opportunities Center Seattle (ROC Seattle) is a member-driven organization consisting of current and former restaurant industry workers, “high road” employers, and thousands of consumers and allies dedicated to ensuring fair, safe, and healthy conditions for individuals working in the restaurant and hospitality industry.

Alongside workers and allies, we gathered signatures and generated turnout for the overwhelming passage of Initiative 1433 in 2016 which increased our statewide minimum wage, enacted Paid Sick and Safe Leave, and secured workers’ rights to tips and service charges. Throughout our engagement with the rulemaking process, we remain focused on how the interpretation and enforcement of I-1433 impacts low wage and marginalized workers.

Thank you for the time and attention you and your team have dedicated to the drafting of the Tips/Service Charges Administrative Policy, and for your response to comments made by us and our members, resulting in new language in Version 2 that: (1) clearly states the authority of L&I to enforce tip and service charge violations experienced by any Washington worker, including those occurring under local ordinances; and (2) prohibiting employers from requiring an employee to contribute to mandatory tips pools in excess of the amount they actually receive in tips.

However, our primary concern has still not been addressed. The Administrative Policy Version 2 does not reflect I-1433’s clear and unequivocal language, that: “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.” We have submitted in past a legal memo (Appendix A by NELP) and public comment (Appendix B by ROC and Legal Voice) emphasizing the rights of all Washington workers to tips and service charges in addition to their wages, whether they earn the State minimum wage or a higher minimum wage under a local ordinance. We ask that L&I resolve this concern by revising the Tips/Service Charges Draft Administrative Policy as follows:

1) Clearly state that I-1433’s provision “Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage,” is interpreted by LnI as applying to all Washington workers, including workers in cities with higher minimum wage laws like SeaTac, Seattle and Tacoma. This will effectively indicate that “employee’s hourly minimum wage” means the higher of either the state minimum wage or any applicable municipal minimum wage or any contracted wage an employer has agreed to pay an employee; and

2) Include examples of tip and service charge violations from the higher minimum wage cities of SeaTac, Seattle, and/or Tacoma, in order to best inform workers in these cities of their rights and ensure employers are in compliance.

In addition, new language in Version 2 creates confusion about how L&I will interpret and enforce violations occurring under local ordinances:
“Ordinances setting minimum wages above the state minimum wage, and the treatment of tips and gratuities under those ordinances, are subject to interpretation by the local authority. The department enforces ordinances as obligated wage payment requirements. See RCW 49.48.082(12) and RCW 49.52.050(2).”

“Ordinances setting minimum wages above the state minimum wage, and the treatment of the employee portion of service charges under those ordinances, are subject to interpretation by the local authority. The department enforces ordinances as obligated wage payment requirements. See RCW 49.48.082(12) and RCW 49.52.050(2).”

This could lead someone to believe L&I enforces local ordinances based on the local authority’s interpretation, even if it is flawed and in violation of state standards. We ask that L&I correct this language to emphasize “the department” will enforce treatment of tips and service charges under local ordinances based on interpretation of local and state ordinances and laws.

Finally, we have attached, for your convenience, FAB No. 2018-3 (Appendix C). These Federal guidelines were offered to all Wage & Hour divisions last year to clarify the definition of managers and supervisors with regard to tip pools. It states:
“The Act prohibits managers and supervisors from participating in tip pools, however, as the Act equates such participation with the employer’s keeping the tips. As an enforcement policy, WHD will use the duties test at 29 C.F.R. § 541.100(a)(2)-(4) to determine whether an employee is a manager or supervisor for purposes of section 3(m).”

There is no standard for defining a manager or supervisor based on hourly pay vs. salary [covered under 541.100(a)(1)]. Therefore, an hourly employee could conceivably be prohibited from participating in a tip pool if they are responsible for the job duties as defined under FAB No. 2018-3.


In conclusion, despite recent improvements to Version 2 of the Administrative Policy, L&I’s failure to offer clear guidance to tipped workers living in cities with local wage ordinances has real and negative consequences for thousands of minimum wage workers in this state, including a negative impact on race and gender equity. Minimum wage workers are disproportionately people of color, and disproportionately women, and women of color. To protect all Washington workers from tip and service charge theft in proper accord with voter-approved I-1433 and to align with race and gender equity principles, we urge you to further revise the Tips/Service Charges Draft Legal Guidance to correctly reflect the language of I-1433 and the intent of Washington’s voters who passed it into law.

Thank you for your consideration.

Signed,

Elena Perez
Director, Restaurant Opportunities Center Seattle

Elena Perez almost 3 years ago

It's still not clear to me how a business can have a policy that forbids accepting tips if the voters voted for language that says employers must pass along all tips given to that employee. It's also unclear to me if an employer that disallows accepting tips can retaliate against an employee if a customer/client leaves the tip in defiance of the rule by the employer.

I suppose the department could take the view that the courts will settle the details (as I'm sure someone will get reprimanded at some point, and it'll find its way into the legal system), but wouldn't it be better to make it clear now that employers cannot forbid employees from accepting tips?

Albert DeWitt Jr. almost 3 years ago

(Submitted on 12/18/18 by Heidi Smith)

I think the people that receive tips should be able to keep them and not have to claim them as income. Small businesses are closing because of all these new wage increases and new family Health leave act. Please think of small businesses not just Seattle..

Allison Drake almost 3 years ago

(Submitted on 12/14/18 by Glenda Milliette, Director of Accounting)

Tips that are retained by the employer and paid to the employee on their pay check. Since accounting for Servers banks (or cash-outs) usually happen the following day - I would recommend that the payment of tips to employees happen in the same pay period or in the pay period immediately following the pay period that the wages are earned. This would allow that last day of accounting for the cash outs that fall into the next pay period, if necessary.

Allison Drake almost 3 years ago

Implementing a Tip pool is difficult because in so many places it largely depends on the honor system, which immediately causes conflict and suspicion between team members. Along with the added administrative duties, handling complaints between staff, securing the cash, etc, etc, this would be an unwelcome layer for us on top of all the rest that goes along with running business.

The State may have better estimate on how much Tipped personnel actually earn in tips, but I've regularly seen an average of an additional $20 to $50 an hour for Tipped Servers.

Honestly the only Fair way to address Tips would be to allow a TIP CREDIT, like the vast number of States in country currently allow. This would allow Employers the ability to pay normally non-tipped employees higher wages for tenure, performance, responsibility etc. You could restrict Tip Credit from establishments that Tip Pool.

Ramsey Zawideh almost 3 years ago

(Submitted on 12/11/18 by Jason Kooi, Hollander Hospitality)

In response to the new draft of the Tips/Gratuities/Service charges administrative policy, I would like to request that the calculation for “Kept on Salary” payments be addressed. The policy specifies that tips and gratuities do not need be included for paid sick time, but is silent as to kept on salary payments for potential work related injury claims.

Allison Drake almost 3 years ago

This version is fair— a vast improvement from the last.

Seri Ann, Thompson almost 3 years ago