Restaurant owners seek two-tiered minimum wage in Minn.

5:41 PM, Mar 26, 2013   |    comments
  • Share
  • Print
  • - A A A +

ST. PAUL, Minn.  --  As momentum builds at the State Capitol for an increase in Minnesota's minimum wage, restaurant owners are asking lawmakers to carve out an exception for tipped employees.

"If you've got a full service restaurant somewhere around half of your employees are sitting in tipped positions," JJ Haywood, the president of the Minnesota Restaurant Association, told KARE.

The Senate version of the bill would increase to state's minimum wage to $7.75 per hour, and index it to increases in the cost of living. The House version would take the minimum to $9.95 over a three-year period, and would also be tied to inflation afterwards.

"It's going to have a huge impact on restaurants because it's like taking half of your workforce and giving them a double digit percentage wage increase," Haywood remarked.

"In reality those tipped employees make far more than the current minimum wage."

Haywood, who is CEO of the Pizza Luce chain in Twin Cities, cited a new survey of restaurant owners that found the average tipped server statewide earns $18 per hour in tips and the hourly wage combined.

The same survey found that many restaurant owners would raise prices to cover the pay bump. Others said it would cause them to put off planned expansions.  Some predicted it would result in layoffs.

Federal law allows tipped employees to be paid as little as $2.33 per hour, because their tips are considered part of their wage.  Many states also feature that same mechanism, known as the "tip credit" in their state wage laws, and set the state minimum for food servers somewhere between $2.33 and the full.

Minnesota law, on the other hand, ensures that servers and other tipped employees, are paid the full federal minimum of $7.25 per hour in addition to their tips.

The restaurant group's two-tiered pay proposal would keep the minimum at $7.25 for servers who earn $12 per hour in tips and the hourly wage combined.

Those who earn less than $12 per hour in tips and wage combine would qualify for the new, higher minimum wage. The averages would be calculated over an entire pay period.

But the union that represents tipped employees in hotels and restaurants is not on board with the notion of a special minimum for them.

"The minimum wage is just that; it's the minimum wage," Wade Luneberg, the secretary/treasurer of UNITE HERE Minnesota, told KARE.

"And so the idea of creating a sub-minimum wage and leaving folks behind whether it's a tipped penalty or a 'super wage' is not helpful to our recovery. Low wage workers and their families ought to be part of the recovery and not left behind."

He said some seasoned restaurant workers do make a good living, but cited recent Bureau of Labor Statistics data showing that the mean hourly income for tipped employees in Minnesota is $8.84 per hour.

"If you're at the Whistle Stop Café in Sleepy Eye you're certainly not making a lot of money, and you almost certainly do not have health care or pension benefits which you may have in some of the metro areas."

The two-tiered proposal didn't make it into any of the wage legislation that passed out of committees and went to the House and Senate floors for debate.

But it's likely to be offered as an amendment from the floor, or inserted during the conference committee process. 

(Copyright 2013 by KARE. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

Most Watched Videos