Legislator wants to alter law that says tips owned by wait staff, not restaurants

AUGUSTA — Stefanie Veneziano is a senior at the University of Maine who waits tables part time at the 99 Restaurant in Bangor. She says the tips she earns help her pay for college and living expenses.

So Veneziano had a lot of questions for Sen. Brian Langley, R-Hancock, when she noticed he was sponsoring a bill that would remove language from state law prohibiting restaurants from claiming ownership of tips and allowing establishments to determine when wait staff should pool gratuities.

"I was pretty worried when I saw it on the legislative calendar," said Veneziano, who is interning for the Maine Senate Democrats. "I didn't know what to think of it."

Neither do Democrats and labor advocates, who are alarmed that Langley's proposal will strip protections added to Maine's minimum wage law in 2007.

Langley, who owns the Union River Lobster Pot in Ellsworth, said his bill is meant to align Maine law with federal law and to allow restaurant owners like himself to determine when wait staff can pool their tips and distribute them evenly at the end of a shift. 

"It's less onerous than it appears," Langley said.

Maine law allows wait staff to decide collectively whether they want to pool tips. Changing that provision isn't the main concern for Laura Harper of the Maine Women's Lobby. More worrying, she said, is that Langley's proposal would roll back wait staff protections that were enacted in 2007 and supported by the Maine Department of Labor.

According to committee testimony documents, William Peabody, former director of the department's Labor Standards Bureau, testified that his department had occasionally been forced to sue restaurant owners for withholding tips.

Peabody said the 2007 amendment would help the department enforce federal regulations that, according to the U.S. Department of Labor, prohibit restaurant owners from claiming ownership of gratuities. According to a federal fact sheet, "a tip is the sole property of the tipped employee."

Langley's bill would remove the clarifying language from Maine law.

"The Department of Labor said we needed to clarify this," Harper said. "To strike all of this language is deeply concerning and we oppose it."

Langley said his bill has nothing to do with giving restaurant owners property rights over tips, or taking a share from wait staff. He said he wanted to simplify Maine law to eliminate the need for lawsuits. He also wanted to allow restaurant owners to pool tips for wait staff, which he said was more equitable and sometimes allowed business owners to hire a smaller wait staff.

Langley's bill, LD 207, has five co-sponsors, including Sen. Garrett Mason, R-Androscoggin, and Rep. Gary Knight, R-Livermore Falls.

But one co-sponsor, Terry Morrison, D-South Portland, said he didn't know Langley's proposal would remove the language from the 2007 amendment.

"Some of this language in that bill I'm not happy with and did not know was in it," Morrison said. "If that language stays in the bill, I will oppose it."

He added, "I do not believe that tips belong to an employer until distributed. I do believe in equity for servers, but I don't believe tips are the property of the business first."

The bill has upset several Democrats who said it could hurt a large segment of Maine's work force and discourage quality service.

Rep. Erin Herbig, D-Belfast, a member of the Labor, Commerce, Research and Economic Development Committee that will be reviewing the bill, questioned why removing the language was necessary.

"I was a waitress and I put myself through college waiting tables," Herbig said. "I can't imagine any person in that same position being OK with this. It's basic understanding that if someone is leaving a tip on their table ... it's for the person that is serving them."

Rep. Mike Carey, R-Lewiston, said the current language encourages good service. He said Langley's decision to remove the language must be an error.

"I can't believe that the intent is to take that tip away and give it to whomever else," Carey said.

Langley said he wanted to fix contradictions between Maine law and the federal law. He said those issues had a big impact on chain restaurants that are operating under two sets of guidelines.

Langley said the Maine Restaurant Association supported the change. Richard Grotton, a lobbyist for the group, did not return messages seeking comment.

Disclosure documents show the MRA lobbied lawmakers on the 2007 amendment to the tip law. However, the group submitted no written testimony outlining its position.

The issue of restaurant owners withholding wait staff tips has popped up nationally, and there are several instances in which wait staff workers have sued their employers for withholding tips or redistributing them to other staff, such as busboys and dishwashers.

Despite the language in Maine's law, several workers at the Front Room restaurant in Portland last year sued the establishment after the owner forced three servers to surrender 15 percent of their tip earnings so they could be shared with non-wait staff.

smistler@sunjournal.com

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From The United States Department of Labor Website

From The United States Department of Labor Website
http://webapps.dol.gov/dolfaq/go-dol-faq.asp?faqid=309&faqsub=Minimum+Wa...

Question: What is the minimum wage for workers who receive tips?

Answer: The Fair Labor Standards Act (FLSA) sets a federal minimum wage of $7.25 per hour effective July 24, 2009 for covered, nonexempt employees. An employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

Some states have minimum wage laws specific to tipped employees. When an employee is subject to both the federal and state wage laws, the employee is entitled to the provisions which provides the greater benefits.

******************************************************************
The exception to minimum wage, which is a sizable savings for the restaurant owner is tied into the employee receiving the tips. The language of the law uses the singular pronoun- not a collective one. It is the individual which must retain all of their tips in order for the employer to retain his minimum wage exemption. If the employees do not retain ownership of their tips, then the restaurant owner id responsible for paying those employees full minimum wage, which is more than three times what they may be paying presently and three times payroll taxes would also apply.

If the owner of the tips is transferred to the owner of the restaurant, the employee does not retain those tips even if the employer redistributes the tips among the employees.

I am starting to see that the

I am starting to see that the 2007 law was poorly written in that it takes away the freedom to use another system that is fair- one based on paying the employee minimum wage or greater as a salary.

The ownership of the tips by the server is tied to the owner’s exemption from paying minimum wage.

Even that exemption is confusing in both state and federal law because it states in Federal law that the owner has to pay the server only $2.13 and hour but then it states that the tip credit cannot exceed 50% of the minimum wage, which does not make the minimum wage bench mark for paying the employee and so I am assuming that “tip credits” are “tax credits” that the employer takes – not to exceed 50% of minimum wage. The tip credit is then not applied to calculating the server’s wage, it is a tax credit for the employer, which is an advantage for the employer that needs to be calculated into the picture.

The provision that the server’s pay must be supplemented to minimum wage if the tips do not meet minimum wage is a fair law, discouraging owners from keeping more staff on the floor than is needed and thus preventing the staff from making an adequate wage. Sending the extra staff home allows the staff that remains to make more money.

If a restaurant wants to pay his staff minimum wage or more, then he should have the right to work out that arrangement as works best for the establishment. The government should not interfere if the restaurant owner is not taking the minimum wage exemption.

The way the 2007 law was written does interfere but the new version is also poorly written. It lacks the clarity of the federal law which makes the server retaining all tips a requirement of the minimum wage exemption. It may be that the proposed law is just trying to undo a poorly written law, but it ends up being poorly written as well – in part because neither law ever mentions the relationship between the restaurants exemption from paying minimum wage and the server retaining the tips.

The problem of payment of credit card tips still remains. If the server owns the tips, which the server clearly does if the restaurant owner takes the minimum wage exemption, then the server should not have to wait for the payment of his tips on the credit card indefinitely. The problem becomes how to legally provide for payment of credit card tips without taking away the owners right to establish a different terms of agreement with the servers if the owner is paying minimum wage or greater. The owner should have that option but it becomes legally complicated to define terms at that point. If a restaurant owner wants to work with a non-standard terms of agreement it should be in writing and the servers would need to make certain that timely payment of credit card tips is properly defined. The law should provide the such arrangements be clearly defined in writing between the employer and the employee and should include a provision related to timely payments of credit card tips.. That way the employer can run his business as he sees fit but the server is also protected.

RONALD RIML's picture

Senator Trahan has withdrawn support for this Bill

I called Senator Trahan this evening to discuss the bill with him.

He told me that he has already withdrawn support for it, and there is no way he will vote for it. He states that he was not initially advised of the full impact of the new changes by the original sponsor. So score one for Dave Trahan. He and I have occasionally butted heads in the past - but he realizes the value of tips for the waiting staff. Kudos to Dave!

Senator Trahan needs to make

Senator Trahan needs to make that as a public statement.

RONALD RIML's picture

He would be wise to distance himself from this.

I spoke to a few waitresses today, who then printed the LD to read for themselves at work.

Needless to say, they were aghast - even a Republican or two among them at the screwing Senator Langley is ready to deliver these servers at the behest of the MRA.

If this is a language issue

If this is a language issue why do we never hear anything about what language is being replaced and what is replacing it. It doesn't matter what the rhetoric is that surrounds the legislation, the law is in the letter of the law- not someone's external explanation of the law. As it stands now the bill takes out the protection for the server. The 2007 bill clearly benefits the server, with that language struck out- and nothing replacing it except a summary,which I am told has "little legal significance" and which transfers ownership of the tips from the individual who earned them to the collective to be administered by the owner who can also partake of a share and pay credit card tips whenever he decides to.

By striking out the language protecting the server, the bill is transformed from one that benefits the server to one that benefits the tax collector and the owner of the establishment. The only protection it provides for the server is that if the tips made combined with the restaurant server wage do not equal minimum wage the restaurant owner has to make up the difference. However since the bill fails to provide a standard for how to account for tips that are paid by credit card and make up the difference between what the owner pays and minimum wage, the bill allows for the restaurant owner to calculate tips on credit cards to cover the minimum wage requirement but to withhold them as long as he decides. While the bill generously guarantees that the restaurant server gets minimum wage- it does not guarantee that the server will be paid that minimum wage on a timely basis.

Contrast this to the massive structure of corporations that our legislature has chartered and in so doing authorising the legislature's "people" to wheel and deal with the taxpayers dollars and offer high growth investors a deal they cant refuse so that the high growth capitalists will invest in Maine. The only thing the taxpayer gets in return for the use of his funds is a claim the the government is creating jobs in the private sector. These jobs are described as "quality jobs" and while "quality jobs" remains an undefined term, it is clear from reading in between the lines that "quality" is measured by purely materialistic standards- higher than average pay, health care, and pension funds for the sector of the economy favored by the legislature, which our lawmakers refers to as "the innovative economy". If you are not among the legislatures favored economic sector, then look to the way the legislature would treat restaurant workers to see what "quality jobs", you get- as this bill would have it- minimum wage but not to be guaranteed payment in a timely way, ownership of the fruits of your labor transferred to the collective to be distributed by the owner, guaranteeing that the legislature gets their cut of the stash to seed the growth of the desirable economic class, no benefits, no health care and certainly no pension funds. What a ruthless bunch of politicians Maine has elected for many years. This bill needs to be considered in the larger context of the feudalistic society that our "representatives" are constructing, through the unconstitutional means of chartering corporations by special acts of legislation- not to worry its all for the good of the "social benefit".

Kevin Saisi's picture

Contact the sponsors

Sponsored By: Senator LANGLEY of Hancock
667-0625 SenBrian.Langley@legislature.maine.gov

Cosponsored By:
Representative KNIGHT of Livermore Falls
(not listed on state web site)

Senator MASON of Androscoggin
577-1521 SenGarrett.Mason@legislature.maine.gov

Representative MORRISON of South Portland
(207) 831-0828

Senator THIBODEAU of Waldo
223-5177 SenMichael.Thibodeau@legislature.maine.gov

Senator TRAHAN of Lincoln
832-4135 dptrahan@midcoast.com

Phyllis Rand's picture

Self-serving?

Legislators are not supposed to write laws that will directly benefit themselves, but, as someone else pointed out, this law seems self-serving. Who's minding the ethics store in the Maine Legislature these days?

Phyllis Rand's picture

If I Knew

If I knew which restaurants opted to claim the tips--assuming the law passed--I wouldn't go there. I expect my tips to go to the waitstaff.

MARC A JALBERT's picture

Nothing to do?

I have never heard of anyone complaining with regards to tips! My view is "If it ain't broke, don't fix it".
Thank you.

Jack Tetreault's picture

Nothing To Do

Right On Marc

Altering the law re: tips

I believe the law re:tips should remain as is. Those folks work had and should be rewarded for their work and not have to relinquish it. They should be rewarded for a job well done. They deserve every penny that they get. Don't fix something if it isn't broke !

Terry Donald's picture

Here we go

We got just a hint during the election. Now we're learning what all our legislators and our governer meant in their talk about helping business. This move is the worst! Trying to take hard earned money away from our tipped Mainers. Those people who receive tips generally make, by law, only 40% of the minimum wage to allow their emploers to get their greedy paws on that money is a travesty and should not be allowed by law!

 's picture

First, this proposed

First, this proposed legislation directly affects Sen Langley and is a gross conflict of interest. He should be censured for even attempting to enrich himself.

Second, no one seems to mention that restaurants are not required to provide a respectable wage to their employees. That should be rectified and then the questions about tips would be moot.

Jeff Douglas's picture

good point

a waiter or waitress only gets paid something like $3 an hour by the resturant. how about they get minimum wage first then split tips.

Kevin Saisi's picture

Cook & Support staff

Cooks, bus staff, dishwashers, hostesses, and prep staff should all be getting full minimum wage. There is no need for tipping them unless you want to.

Kevin Saisi's picture

Tipping

When was the last time you sat at a table and thought to yourself, "Gee, this table was wiped down really well, and the setting is really straight, I think I will give the busboy ten dollars?"

When was the last time you tipped a hostess (not counting the time you asked for a special table)?

When was the last time you felt inclined to go out into the kitchen and compliment, much less tip, the dishwasher?

How often do you tip the cook at the local diner for piling your slop in the plate just right?

Jack Tetreault's picture

Tips

Tips belong to the waiter or waitress that delivered the service. Socialism does not work, people do. I can't think of a faster way for a restaurant to lose business than taking the incentive out of providing good service. Why do we keep going down this road of trying to live off somebody eases labor and ingenuity?

PAUL ST JEAN's picture

It's become the American way,

It's become the American way, Jack. From each according to his means; to each according to his needs. Sound familiar?

RONALD RIML's picture

Wrongo Paulo... Capitalism = "Bend Over, Red Rover"

Capitalism - to each according to his Portfolio, from each according to his vulnerability.

 's picture

he''s never left, but that

he''s never left, but that parrot still posts without being verified. Guess if your a right winger you get away with murder.

Ed Enos's picture

Hahahahaahahaha!

Hahahahaahahaha!

Julie Parker's picture

When my family goes out to

When my family goes out to eat I leave a tip based on how my server performed thier job. If my server gives great service and I leave a fifteen dollar tip why should they have to split it with someone who does not put in the effort.

RONALD RIML's picture

The Server's "Service" depends upon a 'Team'

Without that 'backup' your Server would be unable to provide the most efficient and effective service possible.

Terry Donald's picture

And the team is taken care of

There is a system in place at restaurants, and it is regulated by the staff. The bussers, bartenders etc, all those support people are given cuts by each of the members of the wait staff.
The way it is regulated is how it should be. If I as a waiter, take care of those people who help me do my job better they continue to give me top notch assistance, if I fail to give them their due, they will fail to take care of me. And in the other direction, a member of the wait staff will reward those assistants who go above and beyond the call with a more generous cut at nights end.
It's much like the way the tipping system works, and has worked for decades. You tip the servers that give you best service better, and leave smaller tips for more average or worse service.
For members of management to jump in and grab the money first so they can be the arbiters of the "share" is a great way to upset the balance of the system. It would also leave an undeniable sense of untrust among the tipped staff.
As a customer, I tip for good service to the people who give it, the boss need not have his hands in the mix.

PAUL ST JEAN's picture

Isn't it customary for the

Isn't it customary for the bartender and busboys/girls to get a rakeoff of the waitstaff's tips?

ANTHONY NAZAR's picture

Heading Back to 1911

socialism makes sure all are provided for and can be more democratic than the US pretends to be - cases in point - Denmark and Israel.

Marxism says from each according to his ability - to each according to his needs. Theoretically fine until you get the crew at the top taking a handling fee. Not accusing Mr. Langley, but a red flag flies.

My first thought was this is typically exploitive conservative behavior - that moderated gradually until Langley suddenly said almost off handedly that it would allow him to fire fewer staff and then I went from something I won't say here to typically exploitive conservative. So much for Republican led job creation. More like Republican supported profit taking.

Republican legislators will pay no attention to constituents except to be told that they, the legislator know what is right. I know - I've had one scolding from a legislator and been totally ignored by another of mine. We need to remove their perceived mandate - now. This is only the tip of the iceberg - perhaps the one that sank the Titanic. It's still around, except now it sleeps in Blaine House.

ANTHONY NAZAR's picture

attempted edit failed - webmaster needs to fix function

"fire" should read "hire"

PAUL ST JEAN's picture

The parrot wants to know why

The parrot wants to know why you just don't remove it, then.

Mark Wrenn's picture

socialism

Isn't that socialism? Taking the tips from the people who earn them, then distributing the $$ to the people that didn't? Or, is it just another way for the restaurant owner to cheat the servers out of their earnings?

RONALD RIML's picture

Nope - what you're describing is 'Capitalism' where the

Owner milks the workers for every last cent he can squeeze out of them.

So get your 'Isms" right.

Socialism would be the condition where the employees self-manage the restaurant.

Socialism

The employees self-managing the restaurant is the way socialism works in theory.This can only work in practice in a very small group- the larger the group, the less likely it is to work in practice, and even in a group of two it may be impossible in practice- therefore - in practice socialism requires a bureaucratic class that manages- in this case the legislature is appointing the owner of the restaurant as that bureaucrat. Marxism, on which socialism is based, takes ownership away from the individual and assigns ownership to the collective- another mark of socialism that diametrically opposes the political philosophy on which the United States is founded and which makes the United States exceptional- the founding political philosophy of the Unites is based on freedom for the individual, and so private capitalism is the natural economic system for the political philosophy that founded the union of states. State capitalism is the political philosophy of Marxism and socialism. It is unlikely co-incidence that Article IV, Part Third Section 14 of the Maine State Constitution was added about twenty five years after Marx issued the Communist Manifesto.

When you transfer ownership of property from the individual to the collective - that is socialism.

PAUL ST JEAN's picture

Great observation on the

Great observation on the socialism thing, Lilly...Same thing as oBAMa overtaxing the rich to redistribute the wealth so that those who can't or won't work can get their "fair share entitlement".

RONALD RIML's picture

Where would that put Reagan???

Obama proposes taxing the rich even less than what President Reagan did. And you refer to that as 'Overtaxing?'

My - what would that make of St. Ronald the Arch-Conservative???

Odd how things are when you put them in perspective.......

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