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State Legislature Considers a Bill on Gratuities and the Minimum Wage

By Sally Haase

(March 29, 2024) —- SB No: 221, entitled “An Act Concerning Gratuities As Part Of The Minimum Fair Wage,” if passed, will phase out the tipped minimum wage by 2027. The bill phases out the use of tips (or tip credit) toward ensuring that a tipped worker or server reaches the current minimum wage. Currently, the Connecticut minimum wage established in 2019 with Public Act 19-4 grew to $15.69. The act did not address tipped minimum wages, also called subminimum wages. The current server and bartender rates are $6.38 and $8.23 respectively.

On February 27, 2024, the state legislature’s Labor and Public Employees Committee heard, in a public hearing, testimony on the merits of this proposed bill. Written testimony from this hearing is available on the Connecticut General Assembly website. Excerpts from a few of the pros and cons are listed below:

In Support: Ed Hawthorne, President of the Connecticut AFL-CIO. “Prior to Public Act 19-4, Subminimum wage for a server was 63.2% of the full minimum wage. As a result of Public Act 19-4 the tipped subminimum wages have been frozen at 2017 levels (63.2% of $10.10 + $6.38 for servers), providing employers with a significant discount.”

“Connecticut’s nearly 70,000 tipped workers are 69% women and 28% workers of color, and experience particularly high rates of sexual harassment on the job.…60% of transgender workers report experiencing “scary” or “unwanted” sexual behavior from customers.” “SB 221 will bring clarity and transparency to restaurant wages. It also will bring long-term relief to an understaffed Department of Labor that is struggling to stay on top of wage theft claims.”

Additionally, Planned Parenthood of Southern New England, Inc. stated in their testimony, “Eliminating the subminimum wage will help advance racial and gender equity.”  The spokesperson from the National Consumers League calls the subminimum wage a direct legacy from slavery.

In Opposition:  Scott Dolch, President and CEO, Connecticut Restaurant Association. “It is critically important…to understand there is no such thing as “Sub-Minimum Wage” in our industry—every server and bartender is protected by state and federal law to make at least the current minimum wage of $15.69 per hour. And this minimum rarely comes into play…” In February 2024, a survey of 446 Connecticut servers and bartenders “show[ed] that our service industry is overwhelmingly opposed to this legislation.”

* 95% of those surveyed feel that they will earn less income if this bill were to pass.

* 91% of those surveyed already earn more than $20 per hour and 61% earn more than $30 per hour.

The National Federation of Independent Business (NFIB), asserting that the hospitality industry has reached a critical point, lists increasing costs, in addition to labor costs, resulting in a labor force of discontent and job losses.

In the Haddam area, servers gave their opinions on the change from the tipped credit. One woman server said she thought the servers would lose, the owners would lose, and the customers would lose. Another woman server said she was worried that her earnings would be less with a minimum wage, with higher menu costs and reduced tipping.

An area restaurant owner, who preferred to remain anonymous, explained that her concern was not just the added payroll costs but the high percentage of payroll taxes, which would give small business owners no choice but to raise menu prices. She felt that individuals became servers based on the opportunity to benefit from cash tips, not the $6.83 tip wage. In her industry experience, a good server is “elevated” to please customers for tips.

With the passage of this bill, many servers may move on or there may not be any motivation to provide extra service.  Another owner said that an attentive server who puts a smile on their face and remembers customer names will not only receive better tips, but will bring customers back to the restaurants. Both felt that in addition to good food and drink, customers frequent a restaurant for the experience of being there.

SB 221 passed the Labor and Public Employees Committee along party lines with a 12 to 4 Democratic majority.  Currently, the bill is in the Legislative Commissioner’s Office for review before heading to the State Senate for a vote. It should be noted that Haddam’s representatives, Senator Norm Needleman and Representative Christine Palm, did not return requests for comments on this bill.

 

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