Restaurant Servers Deserve a Better Deal on Tipping

Restaurant Servers Deserve a Better Deal on Tipping


Tim Peacock

New York could soon join seven other states that have done away with the unjust policy of letting employers pay waiters, bartenders and other tipped workers less than the minimum wage, a move that would help lift thousands of low-income families out of poverty.

In much of the country, tipped workers live in a parallel universe as far as labor law is concerned. Under federal law, employers can pay such workers as little as $2.13 per hour — a rate that has not changed since 1991 — as long as their hourly wages plus tips add up to $7.25 an hour. This discrepancy hurts workers by putting them at greater risk of wage theft, sexual harassment and other workplace exploitation — bosses can easily withhold or steal tips, especially from workers they don’t like or who refuse their propositions. These are hardly idle threats, as demonstrated by the recent allegations of abuse against prominent chefs and restaurant owners and the multimillion-dollar wage theft settlements workers have secured in recent years by suing unscrupulous employers. The Department of Labor’s wage and hour division estimated that nearly 84 percent of full-service restaurants it investigated between 2010 and 2012 had violated labor standards, including but not limited to tip violations.

Most states, including many of the 29 that have a higher minimum wage than is federally required, maintain a sub-minimum wage for tipped workers, who number about 4.3 million nationwide. In New York City, the minimum wage for tipped workers at businesses with 11 or more employees is $8.65, compared to $13 an hour for other workers. Gov. Andrew Cuomo has directed his labor commissioner, Roberta Reardon, to hold hearings starting next month on whether the state ought to eliminate that discrepancy through administrative action.

The restaurant industry asserts that raising the tipped wage would hurt small businesses, forcing some to close. Mr. Cuomo and Ms. Reardon should not be swayed by this scare tactic. While there is no doubt that bringing tipped workers up to the minimum wage could reduce profits for some businesses, the experiences of other states show it will not devastate the industry. Consider California. It has for decades required businesses to pay tipped employees the same minimum wage other workers get, yet the state has a thriving restaurant scene that includes everything from mom-and-pop taquerias to fine dining establishments — look no further than the heated debates in foodie circles about the relative merits of eating out in New York versus Los Angeles and San Francisco.

Restaurants open and close all the time, so it is not hard to find stories of businesses that went under after a minimum-wage increase, but a 2015 report by two Cornell professors found little evidence that raising the minimum wage has hurt the industry. Even the National Restaurant Association projects that, over the next decade, employment in the industry will grow by 10.6 percent in California and 6.1 percent in New York.

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