Lawmakers to hold hearing on how tipped workers in Massachusetts should be paid

Adding to an election cycle already bound to feature prominent labor-related fights, a national campaign and an influential restaurant industry group will compete for votes over how tipped workers in Massachusetts should be paid.

Lawmakers will gavel in a hearing Tuesday about a proposed ballot question that would eliminate the separate, lower minimum wage for tipped workers, wading into a topic with clear battle lines and similar campaigns unfolding in three other states.

The proposal pits two well-organized sides against one other. Proponents argue that many servers, bartenders and other tipped employees regularly fail to achieve minimum wage when combining their base pay and gratuities, while opponents warn that the change would carry a “devastating impact on the industry.”

One Fair Wage, which says it represents nearly 300,000 restaurant and service workers, is supporting ballot questions in Massachusetts, Michigan, Ohio and Arizona that would require employers to pay all wait staff, bartenders and other workers their state’s full minimum wage, not the lower rate offered for those who can earn gratuities.

Saru Jayaraman, president of One Fair Wage, said the group previously spent about a decade unsuccessfully pushing legislation in Massachusetts to pay workers a full minimum wage with tips on top before one of its sponsors, Sen. Patricia Jehlen, “suggested we go to the ballot.”

One Fair Wage ran successful campaigns in Washington, D.C. and in Chicago, Jayaraman said, so leaders felt the time was right, especially as they continue to hear reports of workers failing to achieve a full minimum wage once accounting for tips.

“Workers in Massachusetts who’ve been with us for a long time felt like we can’t wait any longer,” Jayaraman said. “People are seeing change in a lot of different places on this issue. We’ve been trying this for so long. We’re not getting anywhere.”

Massachusetts law requires all employers to pay workers at least $15 an hour -- under the “grand bargain” package the Legislature brokered to avert other ballot questions in 2018 -- but they can pay tipped workers $6.75 per hour as long as tips bring each individual’s total pay up to at least $15 hourly.

The question would gradually increase what employers must pay tipped workers over five years until it mirrors the same minimum rate of pay for workers of all stripes.

It would not ban tipping. Employees who collect gratuities today would still be able to do that under the proposal -- the money would just be on top of at least $15 per hour from their employer instead of contributing to that $15 per hour.

Jayaraman said the new model would be “better for customers” because they would know their gratuities are additional bonuses for servers and other staff rather than part of their base pay.

“When you tip in Massachusetts, you think your tips are an extra bonus on top of the wage. You think you’re rewarding good service, but in fact, your tips are being used to cover the employer’s costs,” she said. “It’s basically employers taking your tips and using them to cover their costs [for what] every other employer is required to do, which is to pay a minimum wage.”

The measure has generated less intense policy fights so far this cycle than some other ballot questions, but the battle lines became clear over the past week as opponents formed their own fundraising arm, pushed survey results they say undercut support for the measure, and scheduled a press conference to try to amplify their concerns.

That’s all on top of a lawsuit plaintiffs including Massachusetts Restaurant Association President Steve Clark filed last month, which asked the state’s highest court to toss the measure by arguing that it improperly mixed topics.

Clark argued the idea would increase costs for restaurants -- which typically have narrow operating margins -- and result in higher menu prices for diners.

“Restaurants aren’t walking around with an extra $100,000 in costs that they could just pass on to the consumer. So not only is it going to result in higher prices, but it’s going to involve less profitability, and restaurants right now are probably at the lowest profitability rating that they’ve ever been,” he said.

Seven other states require employers to pay the same minimum wage to all workers regardless of whether they earn tips: Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington. (Clark argued that those states are not a good comparison because their pay models have been in place for decades.)

On Monday, the Mass. Restaurant Association publicized results of a new survey -- which it paid about $17,000 to commission, according to Clark -- that suggested most tipped employees in Massachusetts restaurants like the status quo.

CorCom Inc., a research and consulting firm with headquarters in Pittsburgh, in February conducted an online survey of 351 tipped employees at full-service restaurants in Massachusetts.

The firm found that 86 percent of Bay State tipped workers somewhat or strongly agree the existing model works well for them and does not need change. Nearly nine in 10 said they earn $20 per hour or more, and more than half reported earning $30 per hour.

“The tipped employees are already the highest earners in the restaurant, so all you’re doing is taking a dollar per hour that you may be paying to a dishwasher or a line cook, and now you’re putting it in the pocket of the employee who’s making the most money,” Clark said.

Another provision in the ballot question that’s landed in the spotlight would allow employers who pay a full minimum wage to administer a “tip pool,” which would combine gratuities earned by all workers and distribute it evenly, including to those who did not receive tips.

The Mass. Restaurant Association argued in court that the measure is too different from the underlying wage proposal, making the question ineligible for the ballot.

Jayaraman said tip-sharing -- which she added is currently banned by state law, even if an employer pays the standard minimum wage to all workers -- “creates a better sense of unity and team” between the front and back of the house in restaurants and bars.

The idea has already split potentially influential third parties. As CommonWealth Beacon reported, UNITE HERE Local 26 leaders support the idea of employers paying all tipped workers a full minimum wage but oppose the pooled tip provision.

Clark and his allies signaled they are prepared to continue the fight into November. Opponents of the measure formed a campaign fundraising and spending committee, dubbed the Committee to Protect Tips, last week.

And in the face of the opposition from restaurateurs, Jayaraman said she is not surprised.

“This is the same exact fight we’ve had for 13 years in, like, 20 states. They always use the same arguments and the same tactics. It’s never any different,” she said. “We feel incredibly prepared, and frankly, we’ve been winning. We won in D.C., we won in Chicago, we won in Flagstaff, Arizona.”

The tipped minimum wage proposal is not the only potential 2024 ballot question fight that could pit a worker-friendly campaign against major industry figures.

Two of the most high-profile measures in the mix take aim at the relationship between platforms like Uber and Lyft and their fleets of drivers, likely with national repercussions.

One would give drivers the ability to unionize and collectively bargain. The other backed by the companies seeks to define drivers as independent contractors instead of workers -- a move that the attorney general alleges is a violation of existing state law -- while providing them some new benefits.

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