State AG protests federal rule change that could result in 'wage theft'

File photo A change to the "80/20 Rule" could mean that tipped workers in Maine receive less than the minimum wage.

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By Staff

Maine is protesting a rule change proposed by the federal government that could result in some hourly workers being paid less than the minimum wage.

Attorney General Aaron M. Frey is one of 19 attorneys general who on Monday urged the U.S. Department of Labor not to eliminate a regulation that prevents workers who get tips from receiving a lower wage — but not enough tipped work duties to make up the difference.

Currently, Maine employers are required to pay workers at least $11 per hour; for service workers who receive gratuities, employers can pay half that amount as long as the workers get the other half in tips. For decades, federal law has required employers to assign those workers to duties where at least 80% of their time is eligible for tipping.

But the Labor Department wants to eliminate this “80/20 Rule,” allowing employers to benefit from the so-called "tip credit," pay workers only the $5.50 per hour minimum, and assign them virtually unlimited amounts of non-tipped work.

In a restaurant, for example, servers who typically earn at least $11 per hour in wages and tips could be assigned to cleaning, cooking or other “back of the house” tasks — but only make half their usual pay.

The Labor Department plans to repeal the current rule, according to a public notice issued earlier this year, and said the requirement "created confusion."

Frey and the other AGs wrote in a letter Monday to Labor Secretary Eugene Scalia, “By eliminating the clear parameters used to distinguish when tip-crediting is not permitted, the proposed rule not only impacts workers, but creates uncertainty for employers while offering ample opportunities for increased wage theft."

The AGs also said the proposal violates the purpose of the Fair Labor Standards Act, and that the Labor Department broke federal law when it did not examine the impact of the rule change on wages and increased use of social safety net programs.

“This proposal would harm workers, increasing their uncertainty about take-home pay and opening the door to potential abuse from employers,” Frey added in a press release. “This rule should not be adopted.”

Maine’s minimum wage rises Jan. 1, 2020, from $11 to $12 per hour for most workers. The state adopted a series of annual wage hikes in a 2016 voter referendum, and beginning in 2021 changes will be pegged to the rate of inflation.

The federal government requires a minimum wage of $7.25 per hour, an amount that has not changed for over a decade.

In addition to Frey, signers of the letter to the Labor Department were the AGs of California, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.