Minimum Wage Headed Down in California?

The hard working U.S. House of Representatives worked through the weekend to pass a bill to cut the minimum wage for tipped workers while eliminating the estate tax on large estates. The Estate Tax and Extension of Tax Relief Act of 2006, H.R. 5970, passed the House on July 29. It raises the minimum wage for most employees in states that do not have higher minimum wages under state law, from $5.15 per hour now, to $5.85 an hour, beginning on January 1, 2007, then $6.55 an hour beginning June 1, 2008 and peaking at $7.25 an hour beginning June 1, 2009.

However, in states with higher minimum wages that do not include tips in the calculation (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington), the bill means a pay cut for tipped workers, because the bill actually contains a provision that bars states from enforcing laws that require a higher minimum wage for tipped employees.

How? The federal minimum wage law currently allows employers to pay as little as $2.13 an hour, leaving tipped workers to rely on customer tips to make up the rest of the $5.15 per hour minimum wage. California requires employers to pay tipped employees the same $6.75 that everyone else gets, because it excludes tips from the minimum wage calculation. H.R. 5970 prohibits states that do so from enforcing any higher minimum wage standards with respect to tipped employees making more than $30 a month in tips. Such a law would be unprecedented. Congress has never before placed a ceiling, rather than a floor, on minimum wage rates. Here is the actual language from the bill:

1. SEC. 402. TIPPED WAGE FAIRNESS.

Section 3(m) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)) is amended—

(1) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively;

(2) by striking `Wage' paid to any employee' and inserting `(1) `Wage' paid to any employee';

(3) in subparagraph (B) (as so redesignated), by inserting before the period the following:

Provided, That the tips shall not be included as part of the wage paid to an employee to the extent that they are excluded therefrom under the terms of a bona fide collective bargaining agreement applicable to the particular employee'; and

(4) by adding at the end of the following:

(2) Notwithstanding any other provision of this Act, any State or political subdivision of a State which on or after the date of enactment of the Estate Tax and Extension of Tax Relief Act of 2006 excludes all of a tipped employee's tips from being considered as wages in determining if such tipped employee has been paid the applicable minimum wage rate, may not establish or enforce the minimum wage rate provisions of such law, ordinance, regulation, or order in such State or political subdivision thereof with respect to tipped employees unless such law, ordinance, regulation, or order is revised or amended to permit such employee to be paid a wage by the employee's employer in an amount not less than an amount equal to—

(A) the cash wage paid such employee which is required under such law, ordinance, regulation, or order on the date of enactment of the Estate Tax and Extension of Tax Relief Act of 2006; and

(B) an additional amount on account of tips received by such employee which amount is equal to the difference between the cash wage described in subparagraph (A) and the minimum wage rate in effect under such law, ordinance, regulation, or order, or the minimum wage rate in effect under section 6(a), whichever is higher.'

If this bill becomes law, California workers who earn tips will lose most of their non-tip compensation unless the legislature amends California law to include some portion of tips in its minimum wage calculations. If the legislature wants to maintain the status quo, it could avoid most of the impact of the act by including the first penny of a person's tips in the minimum wage calculations, as the act only affects a minimum wage statute that "excludes all of a tipped employee's tips from being considered as wages..." Of course, the generosity that the California Restaurant Association has shown to the current administration in California makes it unlikely that such an amendment would be signed by anyone other than Phil Angelides.

Comments

It went down in flames in the Senate.

[Lee Shane]

I am considering opening a restaurant, but whit the new Calif min wage for tipped employees, this will adversly effect the overall cost of doing business.
How do you justify a server making $30 an hour when adding in the tips when comapered to any other employee making $8-10 per hour.

[pam the waitress]

How do you justify paying someone only $8-10 an hour in the first place? If you can't afford to part with at least minimum wage because you can't figure out how to make that business model work, you should just go get a job yourself. You are not a businessman. Food servers work very hard, and the tipping system rewards workers who give better service and make more sales. For every dollar that a food server makes in tips, you get $7 in sales. Quit your bitching.

[Chris the Genius]

You Idiot are you paying your servers their tips? I didn't think so. Are you paying them minimum wage? That's what I thought. Your server could very well make minimum wage because tips are Gratuities which means that that are not entitled to receiving this money from anyone. Granted if they please the customers that come into your store the customers place an extra share of the bill aside for your hard working minimum wage employee.

[Josh the wiater]

Wow, I totally agree with Lee. Any restaurant owner that can't afford to give their servers at least minimum wage shouldn't be in business in the first place. They should be working for a restaurant that can.

To answer your question:
"How do you justify a server making $30 an hour when adding in the tips when comapered to any other employee making $8-10 per hour?"

Because servers work harder and deserve it. A cook can stand in the back for $11/hr, scratching his head, cussing, joking around for their shift. Servers on the other hand must always be on their game 100%. They're having to deal with customers, selling food, selling themselves, and having to deal with and fix the cook's mistakes. I've been in the restaurant industry for quite a while. $30/hr is only on the best nights, for 4-5 hours. Factoring in lunches, slow days, non-tippers, etc. tips are way less than that. That is unless you're a server working for a restaurant that always has high tabs, or you're one of those servers that has 10+ tables going at all times. Serving is a trade if you ask me. It takes years of experience, trial and error, and fine tuning to become truly good at what you do. Not to be mistaken with most "servers" who are nothing more than order takers that try not to mess things up. A real server is experienced, knowledgeable in what they sell, know how to read people, always make good conversation and say the right things, know how to sell + upsell, memorize 30+ things at any given moment, and not too mention will never be at a standstill. Not too mention that they're constantly having to deal with some of the cheapest, scummiest, most irritable people sometimes for no tip. I can't even count the number of people that would come in simply because they know it puts them in power. These people usually only order a glass of water and a sandwhich that they'll split with their husband/wife. You can do everything perfectly, and they'll still complain about everything, bitch and moan about this and that, insult you, insult the restaraunt, solely because they know they can and still have their asses kissed. Of course you'd have to, and still not get tipped. I never cared though cause as soon as they walked out the door, they were nothing but poor white trash again.

Let's not forget that a restaurant doesn't only sell food, they sell service. Without the service they're nothing. The post before this hit it on the head. Whining restaurants should seriously shut up, because for every $1 they pay their employees, they should see sales of $7-$10+. I don't care what anyone says, GOOD servers are a restaurants best investment. Not only are they there to meet a customer's every demand, but they're their to increase sales for the business.

The other part of this is that most people don't know that when a servers shift is over, most servers still have "side work". I've actually had 1-2 hours of sidework for some of the restuarants I've worked at. Here I'd be making $3.65/hr (VT tipped min. wage) to be scrubbing down a cooler or cleaning out a dirty microwave. Was I getting tipped for this? No! This seemed like BS to me. I'd love to have somebody come and clean my house for $3.65/hr. I'd keep them here all day. This is the same way restaurants look at it too.

[Angela Kohler]

I currently live in Kentucky where the legal wage to pay servers is $2.13. The year is now 2008. This law allowing restaraunts to pay this meager hourly rate was an absolute shame in 1998 when it was established. Now it is 10 years later. The cost of living has doubled,(at least), gas prices are $4.oo a gallon, I have difficulty finding food I can afford to buy to feed my kids, and every month I have to decide if i am going to pay my light bill or my gas bill. $2.13 an hour is an atrocity. It is slave labor, and we need to stand together to stop it. The company I work for just had a mandatory meeting last week foe all employees. They gathered us all in one room to tell us the company had made 3.7% more in sales in the last 6 months then projected. That was just for the store I work in. We were all told "Thank you very much, the company wouldn't be doing so great if it weren't for you. Now we can run our summer promotion for guests. First place is a brand new R.V. and free gas for that R.V. for one year." When we asked,(the servers), for a pay raise we were then told the company only makes 3 cents on the dollar. Bullshit! When managers make 50,000 a year, and I know this because I was asked to be a manager with the stipulation that I leave my family for 3 months to go between 2 different states for training, which is all at the expense of the company which includes hotel rooms and meals Monday thru Friday and the plane tickets to and from these two cities every Sunday and Friday, plus the managers get monthly bomus's, and the VP's have a State of the Art R.V. to travel in, the company is making more then enough money. All of this success is on the back's of the lowest paid employee's in the country. So to those restaruant owners crying that they might one day have to actually pay their employees, Get a life. I work to support my family not make you rich. The fact of the matter is, T.I.P.S. means To Insure Proper Service. It is called a gratuity. For restaraunt owners ..here is the definition of gratuity: something given voluntarily or beyond obligation usually for some service; especially : TIP. The standard TIP is not 15-20% as most employers like to say. In all honesty, it used to be. Now you are lucky to get 5% and at the end of the day you have worked to be able to afford gas to work again tomorrow. And no I don't want to hear "go find another job." This is a serious injustice to millions of Americans and I, for one, do not belive it is in any way legal, or morally right. It is however, a classic case of the richer get richer and the poor get poorer. As human beings we have the right to live life. With the way things are now, we can't live life. We simply exist.