One State & One City Voted To Eventually Do Away With Sub-Minimum Wages For Tipped Workers

Image courtesy of Jeff Houck

If you’ve never worked in the foodservice or hospitality industry, you may not know that employees who rely on tips often earn base pay that is significantly less than minimum wage (the federal minimum is currently $2.13/hour). Tips can certainly add up to much more than the minimum wage, but they can also be cyclical and unpredictable, which is problematic for people living paycheck to paycheck. Yesterday, voters in one state and one city decided it was time to phase in wage increases that will eventually get tipped workers earning base pay that is at least the minimum.

First up is Maine, where “Question 4” on yesterday’s ballot, which passed with around 55% of the vote, has two aspects. First, it gradually raises the minimum wage in the state from its current level of $7.50/hour to $12/hour in 2020.

At the same time, it incrementally boosts the tipped minimum wage so that it will eventually match up with the state’s standard minimum. Currently, the base rate for tipped workers is set at $5/hour less than whatever the standard minimum wage is. So, right now a server at a restaurant in Maine may be making as little as $2.50/hour, plus tips.

But starting in Jan. 2017, that jumps to $5/hour while the standard minimum increases to $9/hour. Then on the first day of each subsequent year, the tipped minimum will increase by $1/hour until it eventually matches the standard wage.

All the way across the country in Arizona, voters statewide approved a ballot measure that will raise the minimum wage, but keeps the tipped wage at $3/hour below the standard minimum.

However, the city of Flagstaff had its own ballot initiative, Proposition 414, which sets the local minimum wage at $10/hour starting next July with the goal of raising it to $15/hour by 2021, and sets a condition that Flagstaff minimums will increase based on costs of living, and will always be $2/hour more than the state minimum level.

For tipped workers, the city sets out a longterm plan to gradually raise the tipped minimum so that it is equal to the city’s standard minimum by 2026.

The Daily Sun reports that Prop 414 passed with a little less than 54% of the vote in Flagstaff.

Keep in mind that even though the tipped minimum is below the minimum wage, federal law says that employers are still required to make sure that tipped workers are making at least the standard minimum. So if you’re a restaurant owner and tips are so bad one week that your servers aren’t going to take home the full minimum wage, you’ll have to cover any difference between the tips your employees did earn and the standard minimum.