Could paying restaurant workers more end up costing them more?

The News Journal | by Shannon Marvel McNaught

A minimum wage hike for Delaware’s tipped employees might sound like something servers and bartenders would support, but some think it will do them more harm than good.

Rep. Kim Williams’ (D-Newport) House Bill 94 proposes to change the tipped minimum wage from a flat $2.23 per hour to 65% of the regular minimum wage. It’s waiting to be heard in committee.

Rep. John Kowalko (D-Newark) is a co-sponsor of the bill.

“Historically, waitstaff has been burdened with a lesser (pay) rate, the premise being, in an American society anyway, that they will make up the difference in tips,” Kowalko said. “Anybody that gives any thought to this understands the reality that tips are not guaranteed.”

But the income potential for slinging drinks and serving food is often underestimated, according to Lewes bartender Doug Moore.

“I think sometimes our industry gets a little shorted,” Moore said. “This is something to make a career out of, not just something to do in college. I think that gets lost on people.”

Williams did not return calls and emails for comment.

Moore and colleague Peter Briccotto have worked in the restaurant industry for decades. They’re both bartenders at the beaches in Sussex County now and are mobilizing their colleagues against the House bill.

“The industry is reeling due to limited capacities and closures due to COVID,” Briccotto said. “There are several other ways they could be helping us that are far more of a priority.”

A petition Briccotto started asking legislators to “Say NO 2 HB94” had more than 600 signatures as of Feb. 25.

“I think it’s very well-intended and I really do respect (the bill’s sponsors),” he said. “But the reality is that they don’t currently work in this industry and haven’t relied on input from career bartenders and servers to understand what the impacts could be.”

The minimum wage for Delaware’s tipped employees hasn’t change since 1983, according to the bill’s synopsis. At that time, tipped employees were paid 66.67% of the regular minimum wage, but in 1989, the General Assembly made it a flat $2.23 per hour.

“This bill ensures that employees who receive tips or gratuities also receive a minimum wage increase when other employees in the state receive a minimum wage increase,” the synopsis says.

How tipped employees make money is a bit complex. In Delaware, they start out making $2.23 an hour. If their total tips don’t equal or exceed the regular minimum wage of $9.25 per hour, the employer must pay the employee the difference each week.

The bill would result in tipped employees earning about $6 an hour from their employer, who would still be required to make up the difference.

For many servers and bartenders, their tips very much exceed the minimum wage. The average is $28 per hour, according to the Delaware Restaurant Industry.

Their paychecks are sometimes just receipts that say “this is not a check” because their hourly rate goes entirely toward taxes.

“We would just be getting taxed more on the minimum wage without ever seeing a paycheck — in the middle of a pandemic,” Briccotto said.

But there are some tipped employees, according to Kowalko, who make so little in tips that a higher hourly wage is necessary.

“Servers that, say, work day shift, may have four tables in the entire shift. They can’t afford to live on that,” Kowalko said.

He said the reason most of these servers haven’t come forward in support of the bill is that they would be risking their jobs.

Carrie Leishman is president of the Delaware Restaurant Association and looks at the issue from the perspective of restaurant owners.

“Increasing the hourly wage is a costly labor increase and may result in employers cutting hours, turning to more automation,” she said.

Briccotto worries the bill could result in lower tips.

“If this bill was to pass … the perception of general public could be that we’re getting much bigger paychecks and tips would be much less,” he said.

“I don’t think there’s 10 people out of 1,000 that think that much in depth on the matter,” Kowalko said.

There is discussion in the General Assembly on combining House Bill 94 and a coming bill, according to Kowalko.

Sen. Jack Walsh (D-Stanton) is expected to introduce legislation to gradually increase the minimum wage in Delaware to $15. There’s also federal legislation that’s been introduced that would have the same effect.

Should both House Bill 94 and the $15 minimum wage pass, tipped employees would wind up with a $9.75 minimum wage.

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