When Red Caps Lost Their Tips

The Fair Labor Standards Act of 1938 specifically exempted tipped workers, who would not receive a mandated minimum wage until the 1960s.  But there was one exception--after a series of Labor Board hearings and court cases, it was determined that railroad red caps, the men who carried bags through railroad stations, were deemed to be employees of the railroad companies, to be engaged in interstate commerce, and to qualify for a minimum wage.  

These determinations created turmoil in the profession, as railroad station managers tried various strategies to comply with the rulings while minimizing the economic costs of paying a minimum wage.  First they created a system in which red caps reported their tipped earnings to managers, who topped off the earnings of any red caps whose tips had not reached the minimum wage of a quarter an hour, a system rife with abuse.  After more hearings and trials, this system was replaced with the "check and charge" system, in which red caps charged a dime per bag, gave passengers a check for each bag, and then loaded the bags on a dolly and walked away from the passengers.  It dispensed with the personalized service red caps had been known for; previously warm relationships between red caps and their customers were irrevocably damaged.

This case study gives some insight into the current legal structure of tipping (which is actually quite similar to the first experiment with topping-off tips), and it also shows the many ways that tips were used by both workers and passengers to create the actual product being sold--good service.  It helps explain the multifaceted aspects of every tip: gift, payment for services rendered, and something more.  It also lays out the profound losses that come when anti-tipping advocates win the day.