Minimum Wage

Maine’s tip credit appears destined for reinstatement

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The Restaurant Workers of Maine received a major victory Tuesday when the Maine House gave initial approval to LD 673, a bill that would reinstate the tip credit in Maine. The tipped wage was eliminated through the passage of Question 4, which raises Maine’s standard minimum wage to $12 an hour by 2020.

The procedural vote on the bill sponsored by Sen. Roger Katz, R-Kennebec, passed 110-37 in the House, one week after the Senate approved the measure 23-12. Under the law, owners will once again be able to pay tipped workers half of the minimum wage hourly and will still be required to pay the full minimum wage to tipped workers who do not receive adequate tips.

Amended with an emergency preamble at the request of Rep. Stacey Guerin, R-Glenburn, LD 673 faces an additional vote in each chamber. If it receives two-thirds approval in the House and Senate, and the signature of Gov. Paul LePage, it will become state law immediately.

The Restaurant Workers of Maine group was established after the 2016 election by a plethora of Maine servers, bartenders and restaurant owners who were concerned with how the referendum would affect their livelihoods. They packed the state house for a 15-hour long public hearing in April, pleading with members of the Labor, Commerce, Research and Economic Development Committee to reinstate Maine’s tip credit.

Many workers told legislators about how the public’s misconception of their current wage was leading to a decline in tipping, while restaurant owners warned of inflated menu prices needed to make up for increased labor costs. Before Question 4’s enactment in January, tipped workers in Maine received $3.75 hourly plus tips. Prior to LD 673, restaurant owners were responsible for paying tipped workers $12 by 2024 – a 320 percent increase as a result of the referendum’s passage.

This burden would have reshaped the entire dynamic of Maine’s restaurant industry. Many local, family-owned restaurants that gave testimony at the April hearing said they anticipated unfavorable changes to the dining experience in Maine, like replacing servers with IPads (similar to what is seen at corporate chain restaurants), fearing they could not afford the new hourly wage requirements in time to stay in business.

Had this become a reality for restaurant owners, the only way to prevent going under would be to increase menu prices. This, however, drives customers away from local establishments and reduces competition in the industry.

Many owners accept a minimum wage increase but understand the ballot initiative was unmanageable for business. Wendyll Caisse, owner of Buck’s Naked BBQ in Freeport and Windham, told the Portland Press Herald that she’s “completely comfortable” with paying her workers a higher wage, but doubts anyone would be willing to pay $23 for a pulled pork sandwich, the price she suspects to charge customers if forced to pay tipped workers $12 an hour.

The work of Caisse, Susan Price Stephenson and other members of the grassroots organized restaurant coalition did not go unnoticed in Augusta. Many legislators claimed to have never seen such coordination and effective outreach from a group of concerned workers, nor had they attended such a lengthy and contentious public hearing.

Additionally, their movement led to an impressive number of Democratic defections in the House, including speaker Sara Gideon, who surprisingly deserted the ultra-progressive Maine People’s Alliance (MPA). The MPA, in coordination with the Maine AFL-CIO, had been lobbying against the restaurant workers since the start of this legislative session.

Afraid of a large number of defections, the MPA published an article on their media arm, Maine Beacon, in February that listed the names of eight Democrats who co-sponsored LD 673 and similar bills, pressuring them to hold the union line.

Their bully tactics have not succeeded. Instead, it is the Restaurant Workers of Maine who, with courage, drive and respect, are saving their industry from the liberal special interests that infiltrated Maine’s political system through the disguise of a referendum question.

About Jacob Posik

Jacob Posik, of Turner, is a policy analyst for the Maine Heritage Policy Center. He can be reached at jposik@mainepolicy.org.

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