AUGUSTA — A movement to amend part of last year’s state minimum wage referendum took a step forward last week when a bill restoring the “tip credit” for tipped workers was passed by a legislative committee with bipartisan support. The bill, LD 673, now goes to the Senate for initial consideration.
“As members of [the committee] have heard, those working in the restaurant industry overwhelmingly favor the tip credit system that has allowed many Mainers to earn a very decent wage working in bars and restaurants for tips,” Sen. Roger Katz (R-Kennebec County), the bill’s sponsor, said in a statement.
Under current Maine law, restaurant servers and other tipped workers earning a minimum of $5 per hour are scheduled to receive a $1 per hour raise every year until their current subminimum wage reaches the regular minimum wage.
Supporters of the change say that the gradual increase in base pay in the current law could force restaurants and bars to raise prices and cause patrons to tip less, while opponents, including the Maine People’s Alliance (MPA), argue the legislature ought not to tamper with the voters’ decision in passing the referendum.
On May 10, the legislature’s Labor, Commerce, Research and Economic Development committee voted 11-2 that LD 673 ought to pass. The committee heard many hours of public comment on the bill, which they chose from the several submitted on the topic.
Some servers at Bar Harbor restaurants were among a group organized by the Restaurant Workers of Maine that traveled to Augusta for a public hearing in April.
“Listen to the people that work in the business,” Luke Turner of Bar Harbor, a bartender at Cherrystone’s, said this week. “They know what’s right for them.”
Rep. Brian Hubbell (D-Bar Harbor) is a co-sponsor of LD 673. He said he declined to support a competing minimum wage initiative last year but promised constituents who are restaurant owners and workers that he would support a tip credit bill if the referendum passed.
“I hope that, with the restoration of the tip credit, the referendum’s advocates can still understand this as an important step forward for all Maine workers,” Hubbell said in an email.
Sen. Brian Langley (R-Hancock County), himself a restaurant owner, also supports reinstating the tip credit.
The tip credit allows an employer to consider tips earned by a service employee, like a server or bartender, as meeting part of the employer’s obligation to pay the standard minimum wage of $9 per hour.
The language of the referendum did not eliminate the tip credit immediately, but it raises the base pay for these workers one dollar per year until it matches the regular minimum wage. Once the two wages match, several years down the road, the credit would be eliminated, as there would be no difference to make up.
The tip credit bill removes the language in current law requiring an annual increase in base pay. Proponents of the change argue that the tip credit system meets the same goal, which is to ensure workers make at least the minimum wage.
Hubbell said he was pleased that the bill adds employee protection provisions, preventing employers from deducting credit card processing fees from servers’ tips and requiring them to reconcile an employee’s compensation on a weekly basis.
“Those changes, in my view, improve the initiated law,” he said, “They help ensure that all servers are indeed making at least the full minimum wage. I would have supported a further amendment that would have increased the penalties for wage theft as well. But I am content with the overall result.”
The bill still needs to pass the full House and be signed by Gov. Paul Lepage to become law.