Minimum wage ‘tip credit’ idea gets cold shoulder

Some restaurant owners said last week that paying tipped workers the same minimum wage as back-of-the-house staff would increase inequity in the food service industry. Others spoke up this week saying no other California city takes this approach to restaurant wages, and that Berkeley shouldn't be the first. Photo: D.H. Parks
Some restaurant owners said last week that paying tipped workers the same minimum wage as back-of-the-house staff would increase inequity in the food service industry. But tipped workers and labor advocates said this week that no other California city takes this approach to restaurant wages, and that Berkeley shouldn’t be the first. Photo: D.H. Parks

As volunteer Berkeley commissioners grappled this week with how to approach a request from the mayor’s office to help craft a new minimum wage policy for the city, many were in agreement that setting special parameters for tipped workers is not the right approach.

Last week, at a Berkeley Chamber of Commerce meeting, restaurant association reps and local business owners said they hope the city will consider a different — likely lower — minimum wage for tipped employees. Some cities have taken that approach to account for servers who are able to bring in large amounts in gratuities. But opponents of the tip credit say it doesn’t exist anywhere else in California, and that Berkeley shouldn’t be the first.

A Berkeley City Council recommendation to the city’s Labor Commission asked the volunteer panel in April to create a new minimum wage law for Berkeley that is modeled on San Francisco’s ordinance, which went into effect last year. Mayor Tom Bates also asked the commission to consider setting a special rate or rule for tipped workers. That request was added to the original proposal shortly before the council vote, and was an attempt by the mayor’s office to let local business owners know he was aware of their concerns.

Several advocates and workers who attended a Labor Commission subcommittee meeting Tuesday said that setting a “tip credit” to set a lower wage for tipped workers would be both messy and unfair. The subcommittee is made up of three members of the Labor Commission — Irene Yu, Angus Teter and Steve Kessler — and plans to meet every two weeks to discuss the minimum wage ordinance. (Scroll down for details about future meetings.)


Berkeley resident John Elrod, who works in San Francisco as a bartender, said during the meeting’s public comment period that he has followed similar labor issues in nearby cities.

“The idea to carve out an exception for tipped workers would be penalizing people who already are reliant on the kindness of others to get by,” he told the panel. He said many tipped workers are required to share their tips, either via a pool or with other staff members in different ways. “To exempt the tipped workers who are already having to share their money seems draconian. Just because you have a cup on a bar or counter doesn’t mean you’re going to get a lot of money.”

Elrod said it can be a “very slippery slope” to figure out or mandate who actually qualifies as a tipped worker.

One tipped worker, Kayvan Sabeghi, who lives in Oakland and works as a server in Emeryville, said he has to “tip out” the bartender, kitchen staff, the person bussing tables and others.

“My paychecks are small and my bills are get bigger and bigger every month,” he said. “I’ve always had a roommate. I’ve always worked other jobs, sometimes two to three jobs. It’s not enough money to live on, even at $12 an hour.”


Workers said, in many cases, even though they’re tipped, they’re still not making much.

One woman, a Subway employee, said the four or five people on her shift split the money in the counter tip jar, and tend to make $4-5 each in tips for a whole shift.

“Sometimes we even split the quarters,” she said.

Wei-Ling Huber, an organizer with labor organization Unite Here, said, if Berkeley does set up a tip credit, it would be “a major step backwards.” She said, even if Berkeley follows San Francisco’s example and sets the minimum wage at $10.55 an hour, it won’t go far enough.

“I don’t even think it’s close,” she told the panel. “I don’t think it goes far enough but I support the idea of going forward with the minimum wage because that’s where we’re at today.”


Wednesday night, the full Labor Commission met for an update on the three minimum wage subcommittee meetings that have taken place so far. Commissioners did not take a formal vote, but seemed largely in agreement that they do not want to set special rules for tipped workers.

“I would hate to see Berkeley, with its progressive history, take a position that seems to be anti-progressive,” said Commissioner Wendy Bloom.

Commissioner Yu concurred, noting that the subcommittee had already heard lengthy discussion on the idea of the tip credit. The credit, she added, struck her as an “invalid” idea given the research and reports the panel has heard thus far.

“It’s taking way too much time from what we’re doing,” she said. “We’re still opening the floor for people but I think we should start shifting our focus.”

Commissioner Angus Teter said issues still to be hashed out are the recommended starting dollar amount for the minimum wage; how it will be tied into the cost of living or Consumer Price Index; the schedule for phasing it in; how to handle complaints and enforcement; and how to take into account employer concerns.

Teter said he’d like to see the information-gathering phase of the commission’s work on the minimum wage end in late August, with a draft recommendation to the City Council in September. After that, the city could collect feedback, and the council could potentially make a final decision in December.

The commission did not vote on the time line however, and there was some discussion about the scope of the work to be done. One member of the panel advocated for a much broader approach.

“I want to use this as a way of talking about poverty and enlarge the issue, not to expedite things so they can simply get something passed,” said Commissioner Kessler. “This is a way of opening the larger question of impoverishment. And what better place to do it than here?”

Several commissioners responded that, while they liked Kessler’s concept, they believe the group needs to stick more closely to the minimum wage ordinance, and set a clear time line for moving forward.

Saru Jayaraman, co-founder of the Restaurant Opportunities Centers United, and author of “Tipped Over the Edge,” a report about how tip credits inequitably affect women, said Thursday that there’s a huge amount of momentum in many places around the country to raise the minimum wage.

And, though many restaurant and business owners say they fear they won’t be able to afford the increase, extensive research doesn’t bear that out, said Jayaraman, who runs a UC Berkeley-based research center on food labor. Owners may need to get informed about how to work a higher wage into their business plans, and “create efficiencies so they can provide better wages,” but that can be done via training.

“These concerns come up only because they’ve been following the standard of the National Restaurant Association for so long that they haven’t been taught or trained how they can do it differently. And that’s what we can provide,” she said. “The truth of the matter is, there’s really no reason for any business to have to fail.”

The Labor Commission subcommittee on the minimum wage will meet Tuesday, July 2, at 10 a.m. and Tuesday, July 16, at 3 p.m. The full Labor Commission has scheduled a special meeting for July 24 at 7 p.m., which will include the minimum wage on the agenda. Follow updates from the Labor Commission via its city of Berkeley web page. Those who are interested can sign up to receive email updates when new information — such as minutes from past meetings and details about future meetings — are added to the page. 

Related:
Berkeley considers city-wide minimum wage hike (06.18.13)

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