On International Workers Day last Thursday, the Berkeley City Council devoted a meeting exclusively to discuss the minimum wage. California is one of seven states that have abolished a sub-minimum wage for tipped workers; elsewhere, tipped workers earn an hourly wage as low as $2.13 (the federal sub-minimum wage since 1991) and live off tips.
At this meeting, some restaurant owners advocated that any proposal to raise the minimum wage should include a tip penalty, meaning that employers could deduct the tips an employee receives from their hourly wage obligations. This outdated and illegal mechanism (according to California Labor Code Section 351) will exacerbate the economic instability of workers.
Berkeley restaurateurs in favor of the tip penalty generalize the earnings of restaurant workers as higher than $30 an hour – this is not only incorrect, it’s unfair. Most servers are women like Sarah Cain, a Berkeley native and former restaurant worker who constantly juggled multiple shifts —picking up additional shifts while working a second job despite decades in the industry.
“For the first ten years of waiting tables, I worked at mostly casual, ‘mom and pop’ places, where tips were lower, and income was unstable,” Sarah recounts. “As I got stronger as a server, I worked at Rick & Ann’s, which I loved. I could go home with $100, but I would have literally had to wait on 100 people to make that much money. Many days weren’t as lucrative as that, it was hit and miss. My experiences are not unique.”
Another server in Berkeley, Taylor Lee, understands how a tip penalty can create potential for wage theft, having previously worked in Florida where the tipped minimum wage is just $4.91. If Taylor didn’t receive enough tips to meet the minimum wage, “it was seen as, ‘you make a lot on other days so it balances out.’ But that wasn’t true. I was younger then and wasn’t aware of labor laws. I didn’t know that the employer had to compensate up to the minimum wage.”
Tipped workers are also bussers, runners, or bar backs, who generally make negligible tips. Paco Morales has worked as a bar back and food runner in restaurants in both Berkeley and Oakland and says if there were a tip credit, “workers like me would be left behind in this growing economy.” Paco often works 70 hours a week between two jobs to support his family and young daughter. On many occasions Paco has asked his in-laws for financial support and has rummaged for goods, like a pair of shoes, from the streets.
The median wage for California servers, including tips, is only $9.00 an hour, equivalent to an annual salary of $18,720. The most recent figures from the Bureau of Labor Statistics — the absolute gold standard in employment statistics — indicate that servers in Alameda County earn a median wage of just $9.02/hour including tips. Tips are voluntarily given by patrons and cannot be expected to replace a steady paycheck or to subsidize employers’ refusal to pay the lawful minimum wage.
Meanwhile, discrimination — especially in the form of sexual harassment — is exacerbated when workers rely primarily on tips. Female servers must put up with whatever behavior a customer exhibits because the customer provides their income. The Equal Employment Opportunity Commission targets the restaurant industry as the largest source of all sexual harassment charges. While 7 percent of American women work in restaurants, 37 percent of all sexual harassment charges filed with the EEOC come from restaurant workers. Gender pay inequity is actually the highest in states with a tip penalty.
A tipped credit is also problematic for restaurant owners. First, it’s not fair to other industries that don’t employ tipped workers. Second, it’s not even good for Berkeley restaurants — if a tip penalty were introduced, they would be the only restaurants in California subject to calculating pay for each hour a tipped employee works to ensure no-one falls below the minimum wage, a heavy liability.
The restaurant industry is the only industry in the country where employers can depend on customers to foot their payroll. Wages should be based on hiring commitments of employers and hours worked, not whether a customer “believes in tipping,” or feels generous that day.
We are seeing tremendous momentum to raise the minimum wage in the Bay Area. Across the country there are many efforts to abolish the tipped minimum wage. There is no reason why a leader like Berkeley should be regressing on a destructive path, while others are moving forward. Ensuring that tipped workers benefit from a minimum wage increase will continue Berkeley’s tradition as a leader in social justice and sound public policy.
Let’s take advantage of the momentum for living wages by rejecting a tip penalty and pushing for one fair minimum wage.
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