Empirical evidence shows that people of color tend to earn less in tips than their white coworkers, and people of color and women tend to earn less in commissions than their white, male coworkers. Moreover, a growing corpus of social science research suggests that neither tipping nor commissions are strict business necessities. Yet, scholars, courts, and practitioners have yet to recognize a disparate impact cause of action under Title VII of the Civil Rights Act of 1964 alleging that tipping and commissions cause employees to receive less pay because of race or sex and cannot be justified as job-related and consistent with business necessity.
This Article explores legal strategies for combatting the pay disparities wrought by tips and commissions. Foremost, it explains why most tipping and commission schemes evidence a prima facie case of disparate impact and why many employers would be unable to prove that such schemes constitute business necessities. Subsequently, it assesses non-litigation alternatives to attacking such pay disparities, including a reconceptualization of Ricci v. DeStefano—an opinion regarded in much employment discrimination scholarship as a material roadblock to substantive workplace equality—as offering employers the option of offsetting tip or commission disparities via disparate treatment (i.e., affirmative action).
For generations, employers have maintained tipping and commissions as facially-neutral pay schemes which afford employees formal pay equality, but fail to guarantee pay untethered to employees’ races and sexes. This Article provides a roadmap for employees subjugated and discriminated against by such pay schemes. In doing so, it seeks to lay the groundwork for those employees to secure not just facially-neutral pay policies, but substantive pay equality.