H.R.1314 - Tipped Income Protection and Support Act; TIPS Act (119th Congress)
Summary
H.R. 1314, the Tipped Income Protection and Support Act (TIPS Act), aims to amend the Fair Labor Standards Act of 1938 by eliminating the separate minimum wage for tipped employees, ensuring they receive the standard minimum wage before tips. The bill also includes provisions for employees to retain all tips, with an exception for tip pooling among those who customarily receive them. Additionally, it introduces a deduction for cash tips under the Internal Revenue Code for certain eligible individuals.
Expected Effects
The likely effect of this bill is an increase in the base wage for tipped employees, potentially leading to more stable income. This could also result in higher labor costs for businesses that rely on tipped labor, potentially affecting prices or employment levels. The introduction of a tax deduction for cash tips could provide some financial relief for tipped workers, depending on their income level.
Potential Benefits
- Increased Wage Stability: Tipped employees would receive the standard minimum wage before tips, providing a more predictable income.
- Full Tip Retention: Employees retain all tips, promoting fair compensation.
- Tax Deduction for Tips: Eligible tipped workers could deduct cash tips from their income, reducing their tax burden.
- Potential for Improved Worker Morale: Fairer wage practices could lead to increased job satisfaction and reduced turnover.
- Reduced Wage Theft: Clearer regulations and penalties could reduce instances of employers unlawfully keeping tips.
Most Benefited Areas:
Potential Disadvantages
- Increased Labor Costs for Businesses: Businesses may face higher labor costs, potentially leading to price increases or reduced hiring.
- Potential for Reduced Tipping: Customers may be less inclined to tip if they know employees are already receiving the full minimum wage.
- Complexity in Implementation: Businesses may face challenges in adjusting to the new wage structure and tax deduction rules.
- Possible Job Losses: Some businesses may reduce staff to offset increased labor costs.
- Limited Benefit for High-Income Tipped Workers: The tax deduction for cash tips is limited to individuals with adjusted gross income below $112,500.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the Constitution's goal of promoting the general welfare (Preamble) by aiming to improve the financial stability of tipped workers. Congress has the power to regulate interstate commerce (Article I, Section 8), which includes setting minimum wage standards. The bill's provisions regarding taxation fall under Congress's power to lay and collect taxes (Article I, Section 8).
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).