New York, D.C. Continue to Address Tipped-Wage Debate

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By Lisa Dumas –

19tipping00-1-960x430 (1)New York state’s proposal to eliminate the tipped-wage credit for restaurant owners has once again become part of a national debate.

In December, Gov. Andrew Cuomo announced the state labor department would begin holding hearings in an effort to solicit information from workers and businesses about whether to end the system that allows restaurant owners to pay employees a lower hourly wage, with the expectation that workers will make up the difference by earning tips.

“At the end of day, this is a question of basic fairness,” Gov. Cuomo said. “In New York, we believe in a fair day’s pay for a fair day’s work, and that all workers deserve to be treated with dignity and respect. I have directed the department of labor to ensure that no workers are more susceptible to exploitation because they rely on tips to survive. I look forward to reviewing the findings of these hearings.”

Now, a similar proposal, titled “Initiative 77,” has surfaced in the District of Columbia, as one of the most unpredictable measures on the ballot during primary season.

“The actual election in November is even more of a formality in the District of Columbia, where the Republican Party holds little sway,” an article in the Associated Press said. “The greatest question mark surrounds a divisive ballot initiative that would change the way that restaurants and bars pay their tipped employees. Initiative 77 would eliminate the “tipped minimum wage” — the two-tiered system under which restaurant and bar owners pay servers, bartenders and bussers a lower hourly wage with the expectation that they will be compensated with tips from customers.”

Presently, tipped-wage employees in D.C. make as little as $3.33, even though the current minimum wage in the area is $12.50 per hour.

“Initiative 77″ has proposed employers pay the full minimum wage, with an incremental increase to $15 per hour by 2025.

“Proponents of the initiative argue that it would protect employees from unscrupulous owners who refuse to follow the law and match wages to bring earnings up to $12.50 per hour,” the AP said. “They also say it would reduce sexual harassment by making servers less dependent on the whims of sometimes-inappropriate customers. However, the proposal has been opposed by a large percentage of both owners and tipped employees. Owners claim that the financial hit could force many bars and restaurants to close — and those that stay in business would only do so by introducing a new service charge, which would have the effect of eliminating most tipping.”

Seven states, including Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington, have already eliminated the tipped-wage system, and the California Restaurant Association has recently sent the written testimony below to the New York State Labor Department, regarding its perspective on the proposal:

“California restaurants are scrambling to figure out how to remain in business in the long term, as the minimum wage continues to dramatically rise toward the $15 mark. Some restaurants have closed. Many restaurants have either reduced work hours – or are getting ready to do so – in order to be able to afford the higher wage. …Independently-owned restaurants, often operated by families, are the most vulnerable to these fast-rising costs and the biggest reason is that California lacks the mechanism that exists in New York that would allow for employers to take tips into account – at least to some extent – toward the employer’s mandated wage obligations.  …New York would be wise to keep any tools it has in place today that allow businesses to spread  their labor dollars fairly, and wisely. ”

D.C. residents will vote on the proposal June 20, and, should it pass, the district’s tipped workers would be the highest paid in the country.

In addition, Gov. Cuomo’s order to conduct state hearings regarding the tipped-wage system in New York will wrap up with its seventh hearing later this month.

Visit https://www.labor.ny.gov/workerprotection/laborstandards/subminimumwage.shtm to view the state’s full schedule, or https://www.governor.ny.gov/news/governor-cuomo-unveils-5th-proposal-2018-state-state-examine-eliminating-minimum-wage-tip to view the governor’s comments regarding the matter.

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