Otto is hiking prices by 10 percent at its three Portland pizzerias to compensate for the emergency pay provision in the minimum wage ordinance passed by the city’s voters last month.

The measure forcing employers to raise the minimum wage to $18 an hour – time and a half above the $12 minimum – went into effect over the weekend, although the Portland Regional Chamber and five businesses have sued to block the measure. The higher wages will stay in effect as long as the state continues its emergency orders to deal with the coronavirus pandemic.

A spokesman for Otto said the increase in food and beverage prices will partially offset the higher wage, which took effect at the company’s three Portland locations on Saturday. The price increase only applies to the Portland pizzerias and will only be in effect for the duration of Gov. Janet Mills’ emergency declaration, the company said.

Most lawyers are advising their business clients to pay the higher wages because they might otherwise be sued by employees for not meeting the city’s minimum wage standard and could face triple damages if they lose.

The current minimum wage in Maine is $12 an hour. The city’s minimum wage ordinance, which passed with 60 percent approval on Nov. 3, will increase that wage in the city by $1 an hour each year, starting in 2022, for three years, until it reaches $15 an hour in 2024. The measure includes a hazard pay provision mandating time-and-a-half pay during declared emergencies such as the coronavirus pandemic.

“It’s no secret that restaurants are poorly positioned for any increase in costs during the COVID crisis,” said Erik Shepherd, spokesman for Otto. “As is the case with most restaurants, our margins are suffering due to a near-complete loss of dine-in and beverage sales, an increase in third-party orders, and limitations placed on hours of operation. These temporary price increases will allow our Portland shops to remain open during this challenging time.”

Shepherd said prices at the three Portland restaurants will be set back at the levels they had been once the emergency declarations are withdrawn or if a court decides that the emergency wage ordinance is invalid or not yet in effect. In its lawsuit, the chamber is asking the court to rule that the emergency wage referendum oversteps voters’ authority or that it doesn’t take effect until 2022 to coincide with the increase in the minimum wage.

Shepherd said he couldn’t estimate how much money the price increase will generate, but it’s not expected to completely offset the cost of the emergency pay hike.

“We would prefer not to resort to price increases, but the margins are getting mighty thin for all restaurants,” he said. “We cannot guarantee that we will not have to temporarily close any of our Portland locations, but we are doing what we can to keep serving our customers in our Portland communities and to keep our staff employed during this challenging time.

“We are hopeful that our customers will understand and support this temporary price increase,” he said.

Greg Dugal, director of governmental affairs for the trade group Hospitality Maine, said he knows of a small number of other Portland restaurants that are considering price hikes due to the mandated wage increase, but he didn’t know if any had followed through. He declined to identify those considering it and said any price increase would have to be handled carefully because of Maine laws on wages and service charges.

Salvage BBQ in Portland posted a notice on its website that said it would be tacking on a 5 percent fee due to the hazard pay wage hike.

No manager was available for an interview Tuesday night, but the notice said “with our stresses and costs at an all-time high, and our sales at an all-time low, we simply cannot afford to shoulder this additional fiscal burden on our own.”

The notice said the “hazard pay fee” would be lifted once the emergency was ended, going on to say the restaurant appreciated its customers’ support “through these cuckoo times.”

Restaurateur David Turin said he was thinking of adding a service charge at his Portland restaurant due to the wage hike, but decided against it after talking with his lawyer. Federal laws permit things like service charges, he said, but Maine law suggests that any service charge would go to the server and Turin would be unable to use the revenue to offset the cost of the wage hike for other employees.

Turin said he supported the minimum wage hike, but not the emergency pay provision because he knew such a significant increase would be difficult for many restaurants to handle, particularly when they have had to cut back on how many customers they can serve and shift to more of a takeout business due to the pandemic.

Turin’s restaurant, David’s in Monument Square, is operating but at reduced customer capacity. His other Portland restaurant, David’s Opus Ten, is next door and has been closed since early spring. He doesn’t expect it to reopen until sometime next year.

He also owns David’s 388 in South Portland, which he said is primarily offering takeout.

The South Portland restaurant is not affected by the minimum wage or emergency wage increases, but Turin said many restaurants in Portland will see the pay increases as a “a challenge at a very difficult time,” in a year full of challenges.

“It’s going to be very difficult for a lot of us to co-exist with this,” he said.

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