Co-chair B Kyle opened the meeting by asking for feedback on the last week’s meeting. The networking activity had a good response from the committee members. They just wish they had more time to do more!
At that point members voiced questions about the process and work plan of the task force into the coming weeks. Several felt that they are ready to bring their suggestions to the table. Pahoua Hoffman reminded the committee that they are still in phase one: the learning phase. “You can’t learn and defend at the same time.” She will bring the timeline next week; however, committee members are encouraged to continue collecting data and holding their recommendations until next month.
The theme of this meeting was “tip credit.”
First, the committee heard a presentation from Jennifer Schellenberg, server from Northbound Smokehouse & Pub and representative of Restaurant Workers of America. Jennifer introduced the committee to three potential minimum wage tiers:
- prevailing minimum wage at $15
- standard tip credit where employers pay tipped workers $9.65 and the cash wage that makes up the difference to $15
- tip credit with “super wage” where tipped workers are guaranteed to make $15 before tips roll in. In this scenario, servers are protected from downside loss (a low-tip day) while being able to capitalize on the upside of tips (a great tip day). The committee had never heard of the super wage tier, so there were many questions about how these potential minimum wage tiers would function.
The presentation went over the time due to the intensity of the topic. The Citizens League staff will be working on more visual and digestible infographics on how the tip credit and super wage would apply. Jennifer’s presentation can be found here. Other related articles and reports Jennifer mentioned in her presentation can also be found here.
The committee spent some time discussing the loophole on reporting cash tips. It is federal law to report all tips earned – both cash and those paid electronically on a credit or debit card – but, unfortunately, when cash has little of an accountability trail, servers acknowledge that at least some of that cash goes unreported.
The committee had little time left to hear from other panelists who represented food and beverage industry. Jamie Robison, majority owner of Northbound Smokehouse & Pub, spoke to his challenges and his recommended solutions to the committee. His document can be found here.
Torrence Beavers, Executive Chef at Brunson’s Pub, shared with the committee the harsh reality of being a “back of the house” staff person. “We are the first to get cut [when employers go through financial crisis].”
Jeff Crandall, Bartender at Eagle Street Grille, attested that the tip credit is crucial for employees like him who depend on the extra income. He has over 20 years of restaurant experience from dish washer, host, server, cook, and bartender. A majority of tipped workers make more than the back-of-the-house staff -- almost or above $25/hr according to the Equal Employment Opportunity Commission (EEOC), and it is becoming more difficult for restaurant owners to make a profit.
Robert Crew, Director of Food & Beverages Operations of Commonwealth Properties, shared with the committee his struggles keeping up with the finances of WA Frost. Even with the success of the restaurant, 41% of the revenue paid for labor in 2017 leaving 1-2% profit margins for the business. In 2015 they were making 5-6% profit margins.
The remaining meetings during the month of June will continue the topic of tip credit and adjustments. Committee meetings in July will solely be designated for discussing solutions and recommended actions.