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Restaurants argue for ‘tip credit’ against minimum wage

Posted on May 15, 2019 by Sonoma Valley Sun

Paying the legal minimum wage, which the City of Sonoma wants to raise to $15 per hour, will threaten the survival of family-owned restaurants, a local grassroots group says.

“The Concerned Restaurants of Sonoma” is advocating an exemption to the $15 figure, in the form of a tip credit. The credit would apply to all tipped (“guest facing”) employees, who would be paid less per hour.

In a petition statement on Change.org, the group contends that many tipped employees “make $18 per hour with their gratuities, some are are making and additional $35-$50 per hour.”

The group is spearheaded by restaurateur Sondra Bernstein of girl and the fig. Along with other owners, she has been a vocal opponent of a hike in the minimum wage, which, she says, would throttle job growth and raise consumer prices.

The group does not cite an exact amount for any tip credit. (For large employers in New York City where the minimum wage is $15, for example, employers can claim a $5 tip credit and pay employees only $10 in cash wages.)

Here is the full text of the petition:

“We are a group of family owned restaurants that are dedicated to keeping Sonoma authentic and sustainable on all levels. We are actively engaged community members who are concerned with all the challenges that our town is experiencing including the housing crisis and community vitality, and we are determined to run sustainable restaurants that work for all of our employees, locals, and visitors to the Sonoma Valley community.

“Over the past year, the Sonoma City Council has been trying to accelerate the California State minimum wage and is being pressured by a group that has a tagline of “$15 by 2020”.

“Currently, California’s plan is for large businesses to pay $15 by 2022 and small businesses have until 2023.

“The City of Sonoma’s Wage Ordinance includes a 23% increase over a 2 year period for large businesses and a 33% increase over a 3 year period for small businesses.

“An increase this drastic at such an accelerated speed and rate will harm our ability to function as the community-focused entities that we are by reducing our flexibility in business strategy and growth and by ultimately costing our guests more money.  

“Some of us have spent a great deal of time and effort trying to explain some of the intricacies of the restaurant business. One thing is perfectly clear, not all businesses are the same nor can they be operated on the same margins. For most of us, we are already paying our non-tipped employees a MINIMUM of $15 per hour, and we have no issue with this and are willing to go above the State’s plan.

However, our guest-facing tipped employees that are earning minimum wage are making at least $18 per hour with their gratuities, some are are making and additional $35-$50 per hour.

“The impacts of this ordinance for restaurants specifically are drastic due to the dynamics of tipped positions and many entry-level jobs. The exemptions we seek will contribute to:

  • Allow businesses to pay a fair wage to all the staff including non  tipped employees
  • Survival of Sonoma family run businesses
  • Business diversity (i.e. casual eateries, high end eateries, locally owned, etc.)
  • Creation of new jobs and maintaining existing jobs
  • Continuation of community involvement and charitable contributions
  • Business discretion on total compensation packages including insurance, team meals, etc. that aren’t included in an hourly wage.

“Without this exemption, the Sonoma City Council’s proposal as written will be harmful to our community, business sustainability and jobs.

“Our group sent a proposal that was over the State’s plan to the Sonoma City Council, which they did not acknowledge or share at the Council Meeting.  We were given last minute information that caught us off guard about the ‘unlawful’ practice of a tip credit in California. However, the city’s attorney has stated that we ARE ALLOWED make a job class exemption to their ordinance.”

 

 



One thought on “Restaurants argue for ‘tip credit’ against minimum wage

  1. Critical points here:
    One, “sustainable” means social equity is equal to economics, and the top indicators for social equity are decent pay and affordable housing. The restaurant industry as a whole is known for low pay and high turnover. SF min wage hikes and the UC Berkeley Labor Center show the sky will not fall with an expedited $15, and prices will only rise by a negligible percent. These are facts, as well as that service sector, of which restaurants are a big chunk, employees in Sonoma Valley are living in poverty. Sonoma is not somehow different than the whole county and North Bay.

    The real issue seems to be that restauranteurs don’t want to relinquish control of excess wages they command, and that they don’t understand what sustainability really is.

    Restaurateurs are saying that charitable contributions will be reduced… well, if there is that excess money, Labor and Social Justice advocates are saying it is better to pay that to employees up front, rather than to dole it out as charity. It is more dignified, and fair, to let employees decide what to do with what is essentially their money anyway. The philanthropy-non-profit scene in the Valley is paternalistic and aristocratic. That charitable contributions are an issue shows there IS the excess sequestered wages to pay to employees.

    Additionally, if total comp is raised as a point, use the city’s $83 an hour as a benchmark. At stake here really is who is control and who decides what employees do with their benefits? If there is a lot of money being spent on employees, or to charity, give it to them as comp; that’s a straightforward social equity solution.

    For a small % increase in the cost of a meal, in the balance, the council is endeavoring to tip the scales to benefit those who need help the most.

    Finally, if the tip credit thing is to get serious consideration, the council should dial back the compromises they already made for a lower CPI, a slower time frame, no enforcement, and no union carve-out. Otherwise this will look like Management has decided the outcome of the whole deal, which was supposed to benefit low wage workers in the first place.

    Labor has provided compelling and well researched facts and data, and the council chose to compromise on those points to the advantage of Management. My wish would be, since the high -end restaurants are the only ones making a stink, give them their tip credit but in return put in the full JWJ ordinance.

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