Restaurants seek to block raising tipped wages
May 6—CONCORD — Restaurant industry leaders want the Legislature to move preemptively to prevent tipped employees from getting a windfall pay raise if Congress raises the federal minimum wage.
Coming out of the pandemic, the New Hampshire Lodging and Restaurant Association pursued this Senate-passed bill (SB 137), which would take effect only if the Biden administration succeeds in its drive to double the minimum wage from $7.25 to $15 an hour.
For decades, the minimum wage paid to tipped workers like servers and bartenders in New Hampshire has been 45% of the federal minimum wage.
Since 2009, that has been $3.27 an hour.
If business is so slow that servers receive little in tips, the restaurant owner has to make up the difference and bring those workers to the federal minimum wage of $7.25 an hour.
COVID-19 has hit the hospitality industry hard, with many food businesses still only offering takeout or outside dining.
The goal of SB 137 is to ensure that even if Congress raises the minimum wage, the tipped wage here would remain $3.27 an hour.
Without it, if Congress raised the federal minimum to $15, the tipped wage in New Hampshire would go up to $6.45 hourly.
"We are all very aware of the duress and the ongoing pressure of our hospitality industry and what they are going to continue to be under. Without this, an increase in the federal minimum wage is something that could cause many of them to fold," said Senate Majority Leader Jeb Bradley, R-Wolfeboro.
Henry Veilleux, a lobbyist for the restaurant industry, said servers in the state average $20 to $22 an hour. "They deserve it because they do a great job. When we talk about tipped workers, these are not minimum-waged employees."
"They are the highest-paid workers in the restaurant," Veilleux said. He compared servers to dishwashers, who make an average of about $12 an hour.
Michael and Peter Labrie, who own the River House in Portsmouth and the Atlantic Grill in Rye, say they face increasing costs for utilities and food in an industry that already has tight margins.
"In the Seacoast, dishwashers are already making 18 bucks an hour, and the servers are making a lot of money in tips," Michael Labrie said Thursday inside the jazz club he and his brother are building in Portsmouth.
"We've got servers at the River House making $60,000. For us to raise now what we have to pay them times four or five ... It just really makes it difficult for small businesses to survive."
Tipped minimums
New Hampshire and the rest of New England are among 27 states and the District of Columbia that set their own tipped wage.
According to a federal Department of Labor report, New Hampshire is the only state with a tipped wage that is a fixed percentage of the federal minimum.
Sixteen states follow the federal minimum wage for these tipped workers, which is $2.13 an hour, considerably lower than New Hampshire's rate.
Seven states, including California, Washington and Minnesota, don't have a tipped minimum wage. In those states, servers receive at least the state's minimum wage and can keep all tips above that amount.
All other New England states have higher tipped wage rates than New Hampshire's $3.27 rate:
* Massachusetts: $5.55;
* Maine: $6.08;
* Vermont: $5.88;
* Rhode Island: $3.89;
* Connecticut: $8.23 for bartenders; $6.38 for servers.
Maine eliminated its tipped wage in 2015, but two years later then-Gov. Paul LePage signed a law bringing it back, after hundreds of servers packed a State House hearing there.
The highest hourly tipped wages are paid to servers in the District of Columbia ($13.69) and Oregon ($11.25). In New York, service workers like bellhops get $10.40, and servers get $8.35.
"The vast majority of a tipped employee's salary should be tips, not from the wage that is paid," Bradley said.
Some exceptions
This bill would require paying at least $7.25 an hour to tipped workers at cigar bars and to the dealers who work at the state's 16 poker room and mini-casinos.
"These dealers can make up to $12 to $13 an hour in our smaller venues and up to $30 to $45 an hour in the larger casino halls," said Rick Newman, a lobbyist for the New Hampshire Charitable Gaming Operators Association.
The liberal-leaning Center for American Progress noted in a recent report that tipped workers, predominantly women and minorities, have historically been discriminated against and didn't even get a federal minimum tipped wage until 1966, 28 years after the first federal minimum wage.
The federal tipped and minimum wages used to be coupled, but Congress broke them apart. The federal tipped wage has remained the same since 1991.
Viola Katusiime with the Granite State Organizing Project said 12.9% of tipped workers in New Hampshire are women of color.
Dr. Gail Kinney, pastor of the Meriden Congregational Church, said the restaurant industry was overreacting to speculation over changes to the minimum wage.
The federal Raise the Wage Act would raise the minimum gradually, to $9.50 in the first step and eventually to $15 in 2025.
"You should not be passing legislation based on a myth. Please do not be misled," Kinney said.
The federal bill also eventually would bump the tipped minimum to the same $15 rate in 2027.
Deputy Labor Commissioner Rudy Ogden said if Congress significantly raises the federal tipped wage, nearly all New Hampshire employers would have to pay that higher amount, regardless whether this bill became law.
"The one concern we have on this if the feds raise the tipped rate, it will cause confusion," Ogden wrote the committee. "Businesses could run afoul of the feds, but we would not be able to address it."
