Restaurant industry pushes tip penalty; unions and tipped workers push back

You might not have noticed the sky falling in Minnesota’s restaurant industry – unless, that is, you’ve been hanging out in meetings of the House Committee on Job Growth and Energy Affordability Policy and Finance.

The Republican-controlled committee has tucked a measure into its Omnibus Jobs and Energy Bill that would allow restaurants to pay servers and bartenders less than minimum wage. In hearings last month, industry lobbyists claimed the concession is necessary to shield establishments from annual, inflationary increases to the state’s minimum wage.

Minnesota is one of just seven states where employers may not pay a lower, sub-minimum wage to workers on the basis that their income includes tips. Lawmakers removed the “tipped tier” from Minnesota’s minimum-wage rules three decades ago.

But time hasn’t exactly softened the restaurant industry’s opposition.

The state’s minimum wage has increased from $7.25 to $9.65 for large employers over the last four years, and restaurant owners – and some workers – claim the increased labor costs have upended their industry, forcing layoffs, increasing automation and threatening the vibrancy of the local dining scene.

“The goal of this is to keep jobs intact and to keep our businesses open,” Minneapolis bartender Adam Borgen told committee members April 16.

But employment data collected by the state doesn’t back up the industry’s claims. An analysis by the JOBS NOW Coalition found that job openings in Minnesota’s restaurant industry have increased by 200 percent since 2014, when the minimum wage began to climb.

“Restaurants literally can’t get anyone to fill these jobs in the first place,” JOBS NOW’s Kevin Ristau said. “But they say that by raising the minimum wage, you’re going to hurt the very people you’re trying to help, that those opportunities for workers will no longer exist. Well, we raised the minimum wage, and there are more ‘opportunities’ than ever.”

Minnesota’s restaurant scene, meanwhile, remains hot. Ten local chefs and two restaurants were named semifinalists for the prestigious James Beard Foundation awards earlier this year.

So if a political push to make it legal for restaurants to pay workers less than minimum wage sounds like a solution in search of a problem, that’s because it is, UNITE HERE Local 17 Political Director Wade Luneberg said.

“My industry’s obsession with removing income from employees’ pockets has always stumped me,” Luneberg, a former server and longtime officer in the Twin Cities hospitality union, told committee members.

“This is not an industry in crisis,” he added. “Instead, it keeps expanding and diversifying to find more ways of doing business.”

Although most people who testified for or against the measure last month were from the Twin Cities, the bill’s chief author, Rep. Joe McDonald (R-Delano), stressed it was not his intention to preempt local minimum-wage rules.

Minneapolis did not carve out a sub-minimum wage for tipped workers in its $15 ordinance last year, meaning even if McDonald’s bill were to become law, Minneapolis restaurants would have to raise servers’ wages annually in accordance with the ordinance.

Still, St. Paul Regional Labor Federation President Bobby Kasper warned the tip penalty is just one piece of a broader corporate agenda Republicans are pushing at the Capitol. Another piece of the agenda: preempting local control.

“We’re going to fight any effort to put a tip penalty into St. Paul’s minimum wage ordinance because workers in the hospitality industry deserve one fair wage,” Kasper said. “But we can’t ignore what’s happening at the Capitol. These politicians are only listening to their corporate donors, and they could wipe out everything we’ve been working for.”

That’s exactly the feeling Desiree King had when she heard tip penalty legislation was alive in the House. A longtime server who now waits tables in St. Paul, King testified in favor of scrapping the lower minimum wage for tipped workers 30 years ago, and she never imagined she’d have to come back, King told lawmakers last month.

“To say that we, as a group of people because we earn tips, are not valuable enough to make the minimum wage is insulting,” King said. “We are worth more than that.”


  1. Edward Dijeau says:

    What about the Federal Congressional Bill that would make all tip money property of the Restaurant owners? This Congressional Bill is to make sure all compensation is accounted for and TAXED. That is how Federal Employee Tax, Social Security Tax, Federal Income Tax, Medicare Tax and all States Taxes are taken from those tips we leave the servers. it also make the Federal Minimum wage or State minimun wage enforcable because of the paper trail a business must have. But who is to say the tips won’t be pocketed by the employer as “Tax Free Money” unless the tip is on a “credit card” that leaves a “paper trail”. NO MORE CASH TIPS !


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