Lawmakers want tipped employee exemption in minimum-wage law

After pointed testimony by restaurant operators and servers, a House committee on Monday approved a bipartisan measure, 10-6, that would allow employers to pay tipped workers a lower base wage, an effort unlikely to gain much traction in the DFL-led Senate.

Sponsored by Republican Rep. Pat Garofalo of Farmington, the bill is an effort to revise the minimum-wage law passed last year by a DFL-controlled Legislature.

Restaurant workers and labor leaders spoke out against the bill.

The first of three phased-in pay hikes went into effect last summer, raising the state's wage floor to $8 an hour. It will rise to $9.50 an hour by 2016. Beginning in 2018, the minimum wage will be indexed to inflation.

Crafted and supported by the Minnesota Restaurant Association, Garofalo's bill would cap the minimum wage for tipped employees at $8 an hour. The proposed pay change would apply only if those workers earned a total of at least $12 an hour in a two-week pay period, after factoring in tips. If they don't, they would earn the prevailing state minimum wage.

"We think this is a very reasonable way to protect the economics of table-service restaurants," said Dan McElroy, executive vice president of the Minnesota Restaurant Association, during debate on the measure Monday.

McElroy said full-service restaurants may otherwise be forced to switch to a fast-casual or quick-serve format that would rely less on food servers in an effort to cut labor costs.

Though restaurant operators warn that the higher minimum wage will result in the loss of jobs, evidence from the Minnesota Department of Employment and Economic Development undercuts the claim. Since August, when the minimum wage floor rose to $8 an hour, the food and accommodations industry added 3,700 jobs, according to DEED employment data.

Monday's debate picks up on a measure jettisoned by last year's Legislature to add a so-called "tipped employee tier" that almost became part of the minimum-wage package. It had bipartisan support, but failed by one vote in the DFL-controlled House.

Senate Majority Leader Tom Bakk on Monday told reporters that Garofalo's bill is unlikely to find much support in the DFL-led Senate. Gov. Mark Dayton opposes creating an exemption for tipped employees, a spokesman said.

A coalition of labor unions and their affiliates, determined to fight any efforts undermining the minimum-wage law, packed Monday's hearing wearing "Protect the Wage" pins. Several food servers gave passionate testimony against the bill.

"I can tell you that as a tipped worker, the only reason tips matter is because the minimum wage is already too low," said Cliff Martin, of Northfield. "That's why tips make the difference right now. Lowering the wage isn't going to help that."

DFL Rep. Kim Norton of Rochester is one of three Democrats co-sponsoring the legislation, and she acknowledged that her position makes her a minority within her own party on the issue. Nonetheless, she said her support stems from concerns by some of the small businesses that make up her constituents.

"We have an opportunity to have a small modification in a minimum-wage bill that'll be helpful and perhaps ease a little bit of the burden on small business," she said.

The vote late Monday came after the Job Growth and Energy Affordability Policy and Finance Committee picked up from an earlier recess. DFL lawmakers on the committee all voted against the bill, including Rep. Jason Metsa of Virginia, who called the bill a "bad idea."

Garofalo, chair of the committee, noted his effort would need broader support for it to stand a chance.

"This will not become law if there is no DFL support," Garofalo said shortly before the vote.