July 6, 2023
Dear Member of Congress,
We write in support of S. 781, the Tipped Employee Protection Act, and encourage all members of Congress to cosponsor this important legislation.
The Tipped Employee Protection Act was introduced in the Senate by Senator Mike Braun (R-Ind.) and a companion bill, H.R. 1612, was introduced in the House of Representatives by Congressman Steve Womack (R-Ark.).
The bill amends the definition of “tipped employee” in the Fair Labor Standards Act of 1938 to provide greater clarity and stability for these workers and their employers. The bill would reduce regulatory uncertainty and compliance costs for businesses with tipped employees by providing clear definitions and constricting the zigzag policy changes that result from frequent executive and judicial branch reinterpretations.
The bill follows the enactment of a new Dual Jobs final rule by the Department of Labor (DOL) in 2021. The rule overturned a Trump-era rule and instituted burdensome new restrictions on employer tip credits when a tipped employee performs “non-tipped, directly supporting work” for more than 20 percent of the workweek or for any continuous period of 30 minutes.
The 2021 DOL rule created significant compliance costs for employers, who under the new standard would need to track every employee’s activities down to the minute. DOL itself admitted that the 30-minute rule would cost businesses $177 million annually for compliance, though that figure is likely a severe underestimate, having been calculated on the premise that each affected business would need to spend just 10 minutes per week ensuring compliance. The U.S. Court of Appeals for the Fifth Circuit acknowledged as much in an April 2023 decision reversing a lower court’s denial of an enjoinment on the rule, amid an ongoing lawsuit.
Tipped employees and the businesses that employ them deserve stability. Over 4 million Americans earn income through tips, about half of which are employed as food service workers. The restaurant industry alone contributes more than four percent of U.S. GDP and 11 million jobs. The Tipped Employee Protection Act would reduce risks for these businesses, allow their employees to bring home more pay, and ensure that excess regulatory compliance costs are not passed down to consumers in the form of higher prices.
Tipped industries, and especially the restaurant industry, have faced enough hardship in recent years due to the economic fallout from the COVID-19 pandemic. Congress should ensure that fewer, not more, burdens are placed on these essential workers and small businesses.
We encourage all members of Congress to cosponsor S. 781 and H.R. 1612, the Tipped Employee Protection Act.
Signed,
Americans for Tax Reform
Alabama Restaurant & Hospitality Association
Alaska Cabaret, Hotel, Restaurant & Retailers Association
AMAC Action
American Consumer Institute
Americans for Prosperity
Arizona Restaurant Association
Arkansas Hospitality Association California Restaurant Association Colorado Restaurant Association
Connecticut Restaurant Association Consumer Action for a Strong Economy Delaware Restaurant Association
Digital Liberty
Florida Restaurant & Lodging Association Freedom Foundation
Georgia Restaurant Association
Hawaii Restaurant Association
Hospitality Maine
Hospitality Minnesota
Hospitality Tennessee
Idaho Lodging & Restaurant Association
Illinois Restaurant Association
Independent Women’s Voice
Indiana Chamber of Commerce
Indiana Restaurant & Lodging Association
Institute for Liberty
Institute for the American Worker
Iowa Restaurant Association
Kansas Restaurant & Hospitality Association
Kentucky Restaurant Association
Louisiana Restaurant Association
Massachusetts Restaurant Association
Michigan Restaurant & Lodging Association
Mississippi Hospitality & Restaurant Association
Missouri Restaurant Association
Montana Restaurant Association
National Restaurant Association
Nebraska Hospitality Association
Nevada Restaurant Association
New Hampshire Lodging and Restaurant Association
New Jersey Restaurant and Hospitality Association
New Jobs America
New Mexico Restaurant Association New York State Restaurant Association
North Carolina Restaurant & Lodging Association
North Dakota Hospitality Association Ohio Restaurant Association
Ohioans for Tax Reform
Oklahoma Restaurant Association Open Competition Center
Oregon Restaurant and Lodging Association
Pennsylvania Restaurant & Lodging Association
Property Rights Alliance
Puerto Rico Restaurant Association
Restaurant Association of Maryland
Restaurant Association of Metropolitan Washington
Rhode Island Hospitality Association
Shareholder Advocacy Forum
Small Business & Entrepreneurship Council
South Carolina Restaurant & Lodging Association
South Dakota Retailers Association Restaurant Division
Taxpayers Protection Alliance Texas Restaurant Association
U.S. Chamber of Commerce
Utah Restaurant Association
Vermont Chamber of Commerce
Virginia Restaurant, Lodging & Travel Association
West Virginia Hospitality & Travel Association
Wisconsin Restaurant Association
Wyoming Lodging & Restaurant Association