Amend Massachusetts Tips Law
The MRA supports S.862 and
H.1749 “An Act to Protect an Employee’s Right to Tips” filed by Senator
Jack Hart and Representative Aaron Michlewitz.
The Massachusetts Restaurant Association seeks a modest change to address a problem restaurant employees have with the statute (chapter 149, Section 152A) regarding tips. Employees whom a customer expects to receive a tip for work they performed are prohibited from doing so because, in addition to their waitstaff work, those employees sometimes have management responsibility. Restaurateurs that strive to do the right thing risk fines or litigation if they distribute or otherwise permit such employees to receive tips even though they have earned them.
Problems with existing statute:
I. In our industry there are many managers who supplement their income by working non-managerial shifts to earn additional money. Clarification is needed to accommodate this common practice. The existing statute says employees may not participate in a shared tip pool if they have managerial responsibility.
II. Very often at catered events all staff will ride to the event site together, unload the trucks, and set up the party. At the end of the event, whether or not there is a tip in the contract, the host will hand a gratuity generally to the event coordinator and ask that the money be distributed amongst everyone who served the attendees. According to the statute, anyone who has managerial responsibility cannot accept the tip even though it was intended for them.
III. Waitstaff employees are declining promotions and increases in responsibility because they do not want to give up access to the tips that they would normally be entitled to for working waitstaff hours. An increase in responsibility outside of common waitstaff duties, such as scheduling, ordering, or closing the restaurant should not disqualify an employee from proportionally sharing in a tip if they worked as waitstaff for a particular shift. Restaurant employees should be encouraged to grow in their position and responsibility, without having to give up earned tipped opportunities.
IV. In a recent ruling, where a lawsuit was dismissed (MESHNA, et al v. SCRIVANOS) the ruling judge noted that “The volume of litigation in this Court under this statute, and the variety of theories presented, suggest that compliance is not a simple task.”
The proposed amendments would permit employees who have managerial responsibility but also perform the work of a wait staff employee as described in 152A to share in tip pools if they contribute to the pool in the same
manner and proportion as other wait staff employees. Similarly, such employees could share in function service charges in proportion to the work of a wait staff employee they performed.
Mandatory Paid Sick Leave
The Massachusetts Legislature is considering a proposal to mandate that all employers with 6 or more employees, regardless of size, type or industry to provide paid sick leave. If adopted, this law would allow all employees, including part-time, to accrue 1 hour of paid sick time for every 30 hours on the job, up to a maximum of 7 paid days per year. All hours would be able to accrue from one year to the next and all employees would be eligible the first day upon being hired.
The Massachusetts Restaurant Association opposes H.1739 and S.900, An Act Establishing Earned Paid Sick Time.
The Massachusetts economy is significantly impacted by the restaurant industry, which encompasses nearly 10% of the state’s workforce. Massachusetts and the restaurant industry continue to recover from the economic crisis. However restaurants remain particularly vulnerable given their small profit margins and unusually high operating expenses. Now is not the time for another government mandate that will increase the cost of business on top of higher food costs, higher taxes, higher commodity prices and higher energy prices.
The restaurant industry is labor intensive and largely composed of part-time employees. Presently, these part-timers, generally resolve scheduling problems amongst themselves or through communication with their supervisor. The industry norm is to allow staff to exchange days off on any night that they want, provided that they arrange for a co-worker to cover their shifts. This practice allows employees to prioritize their absences from work and minimizes abuse while ensuring a workforce that is present and able to meet the labor demands or these businesses.
A restaurant is drastically different from a professional office setting, as the operation must be fully staffed at all times in order to prevent disruptions in service. Employers should be given the flexibility they need to determine their own sick leave policies, as most establishments already provide some form of paid time off for full-time employees. Allowing any employee to take sick time in one or two hour increments would be disruptive to our labor intensive industry.
Proponents have tried to tie mandated sick leave to health threats presented in foodservice operations. The restaurant industry is dedicated to protecting public health. There are already very important laws and regulations in place to protect both employees and customers. For example, the State Sanitary Code (105 CMR 590.000) requires that any employee who reports to work with an illness must be sent home altogether or be given restricted duties. Massachusetts has a very successful track record in food safety in restaurants. It has nothing to do with sick leave policies but instead has to do with a well-educated workforce and a very good public health department.
A paid sick leave mandate would increase payroll costs and administrative costs, cause a reduction in productivity, and prevent those who do provide these benefits from enjoying their competitive advantage for good workers. This mandate would impose a serious hardship on the small businesses of the Commonwealth. Studies have also shown that employees absorb the cost of mandated benefits through lower wages or reductions in the number of hours worked.
Click here to view the Op-Ed article on paid sick time published in the Worcester Telegram & Gazette.
Miniumum Wage/Cash Wage
The Massachusetts Restaurant Association supports maintaining the minimum wage at its current level. The best solution to minimum wage concerns is a strong, expanding marketplace that creates jobs with resulting training opportunities for less-skilled workers.
Minimum Wage Factors
Many restaurant employees earn significantly more than minimum wage. The only workers who make minimum wage in our industry, for the most part, are either kids who are learning great employment skills or people who are challenged in some way or another. Raising it too high, too fast, will hurt those who you are trying to help the most, squeezing them out of the work place.
- Restaurant industry wages grow naturally. The average hourly earnings of non-supervisory eating and drinking place employees increased at a 2.2 percent rate in 2012, compared to a 1.6 percent gain in wages of non-supervisory employees in the overall private sector. (National Restaurant Association)
- The average household income of restaurant workers that earn the federal minimum wage is $62,507. The vast majority of restaurant workers that earn the minimum wage work part-time and are not the heads of their household. (Bureau of Labor Statistics)
- A majority of minimum wage restaurant workers are just beginning their professional lives. Forty-six percent of federal minimum wage restaurant workers are teenagers, while 70 percent are under the age of 25. (Bureau of Labor Statistics)
- The minimum wage is merely the amount that is required to pay someone for an hour of work. The proponents often lump together the minimum wage with the living wage. A training wage should be used for high school kids just entering the jobs market because of the direct supervision required and the limitations places on their duties.
- Minimum wage increases have a compression impact on other earners. When the minimum wage is increased workers who make more than the minimum wage will demand higher wages to maintain pay differentials.
- Minimum wage increases negatively impact restaurant jobs and drive up consumer costs. When labor costs rise, employers in labor-intensive industries such as ours are forced to raise prices to maintain profitability.
| Average Sales per Full-Time Equivalent Non-Supervisory Employee
| Eating & Drinking Places $79,000
|| Gasoline Service Stations $577,000
| Grocery Stores $290,000
|| Auto Dealers $637,000
Despite growth, the restaurant industry is still in recovery after the recession.
- The restaurant industry was certainly not immune to the recession with job losses in 2009 and 2010 representing just the second and third years on record that the industry cut staffing levels. (National Restaurant Association)
- Although, meals tax is still up 3.6% for the year in Massachusetts, 2 recent months have seen a decrease in collections over same month in 2012.
- Indexing the minimum wage to a National CPI assumes that all parts of the country share similar economic strengths and inflation rates. Varying economies would place negative effects of a higher wage on our market.
Cash Wage Factors
The Massachusetts Restaurant Association supports maintaining the cash wage as it currently stands. The cash wage as works for employees and employers throughout Massachusetts. Additionally, the Commonwealth benefits from increased reporting of earned tip income.
- Waiters and Waitresses have two sources of income: the cash wage that they are paid and the tips that they receive from patrons.
- Waitstaff are supposed to claim all of their tips. Although it is common knowledge that many do not claim all of their tips, there has been a great improvement in compliance in recent years as the IRS has been enticing employers to encourage their employees to report more.
- Under current law, all tipped employees are guaranteed to make at least minimum wage. If a tipped employee claims less than $5.37 per hour then the employer must pay the difference.
- According to the U.S Bureau of Labor Statistics, the average tipped employee in Massachusetts earns $13.13 per hour. The highest rate in the country.
- Boston/Cambridge/Quincy NECTA- highest paying metropolitan area in the country for wait staff earning an average of $13.69 per hour
- Massachusetts has three of the top 10 highest paying metropolitan areas in the country
- The employer must pay all of the taxes on both the cash wage that is paid the employee and the tips that are paid them by the customer. The employer pays federal and state unemployment taxes and the employer’s contribution to FICA taxes on the entire amount.
- The present law ensures that minimum wage will be paid no matter what the wage level is. Employers can only pay the minimum cash wage of $2.63 if the employee is claiming the difference between the cash wage and the minimum wage in tips.
- Those in waitstaff positions benefit from a natural increase in wages through menu inflation. As food costs and operator cost increase, menu prices are forced to be raised as well. Menu inflation averages about 3.5% each year. As menu prices increase, the amount left as a tip also increases.
- There is no need to change the current law as the current law ensures that employees earn minimum wage. In fact, these employees are not minimum wage earners. Although included in the minimum wage earner calculation, these employees are compensated far above the minimum wage.