ST. PAUL - After a highly partisan and contentious debate last spring that resulted in raising Minnesota’s minimum wage, a Republican House committee chairman re-opened the issue Monday with a plan to treat tipped workers differently.
Rep. Pat Garofalo’s bill, which would allow employers to pay a lower wage to employees who earn more than $12 an hour in pay and tips, was passed by a committee and heads to the House floor.
But it faces long odds of final passage.
Democratic-Farmer-Labor Gov. Mark Dayton has said he doesn’t support it, and DFL Senate Majority Leader Tom Bakk of Cook said passage is unlikely in the Senate, where no companion bill has been introduced.
Garofalo, of Farmington, said his bill has the support of three DFLers, as well as two other Republicans, and he repeatedly said he is willing to compromise to get more bipartisan support.
The 10-6 committee vote was along party lines.
Garofalo said current law unfairly allows servers, who are often the highest paid restaurant employees, to get raises under the new minimum wage structure, leaving less for workers who don’t receive tips.
He said the law also adds costs for restaurants that will result in fewer server jobs and more automation over time.
His bill would let employers pay the current rate of $8 per hour to workers earning more than $12 per hour in pay and tips. Those workers would keep their tips as well.
Those not earning $12 or more in wage and tips would get the wage called for under the law, plus their tips. The minimum wage rises to $9 in August and $9.50 next year. Beginning in 2018, increases will be pegged to inflation.
“At no point is the $8 an hour minimum wage going to kick in unless they’re making over $12 an hour,” Garofalo said. “If you fall below that $12 an hour threshold, this bill simply does not apply to you.”
The new minimum wage rules would not apply to workers covered under collective bargaining agreements.
More than two dozen people testified Monday at a hearing before the Job Growth and Energy Affordability Policy and Finance Committee, which Garofalo chairs. Opponents outnumbered supporters by more than 2-to-1.
Those opposed included servers, labor organizations and faith groups. Several restaurant owners testified in favor.
Jacquita Berens of Robbinsdale, a waitress for several years before taking another job recently, said serving is hard work and tips are not guaranteed.
She challenged committee members to try doing the work for $8 an hour for a few weeks to see if they could live on it. “I guarantee it, you can’t,” Berens said.
Another longtime restaurant server, Anna Bartholomay, said the bill would worsen the pay gap between men and women.
And Rick Varco, political director at SEIU Healthcare Minnesota, said driving down wages for restaurant workers would do the same for employees in health care and other industries.
But Tim Mahoney, owner of the Loon Cafe and J.D. Hoyt’s in Minneapolis, gave an example of the labor costs involved for business owners.
He brought in pay records for one of his waitresses for the first two weeks of February, one of the slowest times of the year. She made $21.38 per hour in tips, he said, plus the minimum wage.
“We’re not all millionaires. We work damn hard,” Mahoney said of restaurant owners.
“It’s a real big deal,” said Bryan Turtle of Turtle’s Bar and Grill in Shakopee. “Our hands are tied. The only thing we can do is raise prices.”
Keith Olson of Keith’s Kettle in Clearwater said that with the raises for serving staff, there’s not enough money to treat cooks and other staff fairly.
The system that Garofalo lays out is better, Olson said, because “it doesn’t put as much pressure on the entire restaurant.”
The Minnesota Department of Employment and Economic Development reported in the first quarter of 2014 that the median pay in wages and tips for the state’s 48,000 servers was $8.68 per hour. Ninety percent earned less than $11.93 per hour.
According to a 2013 survey by the Minnesota Restaurant Association, wages and tips for servers averaged $22 per hour in the Twin Cities metro area and $18 statewide.
Last spring, Minnesota passed legislation taking the state from one of the nation’s lowest minimum-wage states to one of the highest.
No Republicans in either chamber of the Legislature voted for the increase.
The law passed 35-31 in the Senate and 71-60 in the House.
Garofalo was among the GOP critics of the legislation last spring, calling it a “bargain among thieves” that the then-DFL House majority traded with their Senate DFL counterparts for the new office building senators wanted.
Unlike in Minnesota, federal law and most states allow employers to factor tips into minimum-wage calculations.
Tipped workers’ wages
What would the bill do: Amend the minimum-wage law passed last session to allow employers to pay a lower wage to tipped employees who average at least $4 an hour in tips during a pay period. Those workers would get the current minimum wage of $8 per hour plus their tips. Workers who average less than $4 an hour in tips would get their tips plus the prevailing minimum wage, which goes up to $9 per hour Aug. 1 and $9.50 in August of 2016. An annual inflation adjustment capped at 2.5 percent starts in 2018.
Why now: Republicans now control the House after the all-Democratic Legislature and governor raised the minimum wage last session.
What prospects: DFL Gov. Mark Dayton opposes the bill and there is no companion legislation in the Senate, where DFL Majority Leader Tom Bakk calls its chances of passage “unlikely.”
The Pioneer Press is a media partner with Forum News Service.
