Battle Escalates Within D.C. Restaurant Industry Over Tipped Minimum Wage Vote
May 9, 2018
By The 2030 Group
By: Laura Hayes
There’s a war going on and Peter Bayne has the propaganda to prove it. He’s carrying around two copies of the food and drink menu at Franklin Hall. One is today’s menu, the other is a mirror image, but with prices that are 40 percent higher. The bar owner says he’d have to up his prices that dramatically to cover increased labor costs should ballot Initiative 77 pass. Imagine paying $11 for a jumbo pretzel and $8.50 for a pint of Port City Optimal Wit.
He’s not the only bar owner bracing for the worst. “Businesses will shutter, the face of dining in the District will be forever changed,” says Tune Inn owner Lisa Nardelli. “It will be the end of the industry as we know it.”
On June 19, voters will decide whether the city should eliminate its two-tiered wage system. Tipped employees currently earn $3.33 an hour compared to the standard minimum wage of $12.50. All but seven states in the U.S. have this so-called “tip credit” that restaurateurs rely on to staff a robust team of employees and tame prices for customers.
Even with this tip credit, all workers in D.C. are entitled to the standard minimum wage. If a worker fails to reach $12.50 per hour with their base wage plus tips, the employer is required to make up the difference.
If 77 passes, the tipped minimum wage will go up eight increments until it equals the standard minimum wage in 2026. The standard minimum wage will reach $15 in 2020. Increases after that would be tied to inflation. If 77 doesn’t pass, the tipped minimum wage will still increase to $3.89 in July, $4.45 in 2019, and $5 in 2020.
Diners may have noticed servers and bartenders sporting “Save Our Tips” buttons that ask D.C. residents to vote no on 77. The initiative committee by the same name is one of several being bankrolled by industry leaders, operators, employees, and trade associations. National groups like Restaurant Workers of America (RWA) have also joined the local fight against 77.
Restaurant Opportunities Center United (ROC) is the national nonprofit that’s bringing 77 to the table. They advocate for workers rights and the elimination of the tip credit in favor of “One Fair Wage.” ROC tried and failed to do away with the tip credit when the D.C. Council approved increasing the standard minimum wage to $15 in June 2016, but after jumping a few more hurdles, including gathering enough signatures from voters, ROC succeeded in getting 77 on the ballot two years later. Now this monumental decision is in the hands of the voters, and early local and national polling suggests D.C. residents will vote yes on 77.
Nearly 40 interviews of industry professionals reveal a battle that’s both high stakes and highly emotional. Restaurants and hospitality is the third largest private sector employer in D.C. according to 2017 Bureau of Labor Statistics data. The $3.8 billion industry has sparked growth, employed thousands, attracted visitors, and arguably formed the commercial backbone of changing neighborhoods.
Tipped workers and their employers have called 77 “a solution in search of a problem” that could devastate the industry that already operates on thin margins. City Paper reported inJanuary that Baan Thai only makes 71 cents per serving off of its most popular Thai noodle dish after paying for ingredients and fixed costs like labor and rent.
Meanwhile, proponents of 77 want to elevate a sector of workers they say earn poverty wages, adding that tipping and a two-tier wage system disadvantages women and people of color and is a prime cause of sexual harassment.
While employers wouldn’t have to pay tipped workers $15 immediately if 77 passes, Restaurant Association of Metropolitan Washington CEO Kathy Hollinger believes restaurants will start feeling the effects sooner than 2026. “When it goes to $7.50 in 2020, that will be the tipping point for a restaurant operation,” she says. “That’s when they would have to rethink their business model.” New model options include instituting a mandatory service charge, raising prices, or switching from full-service to counter service.
Sally’s Middle Name experimented with a service charge in lieu of tipping when they opened in 2015. Because the charge was mandatory for guests, the money was no longer considered gratuity and became property of the owners, who chose how to distribute it amongst staff.
“We wanted to create a steady living wage for all of our employees,” says chef and owner Sam Adkins. He sought to level the playing field, as cooks don’t typically share in tips. He also wanted to minimize reliance on guests’ whims. “We wanted people to treat it like it’s a profession instead of a gift,” he says. “So often tipping is biased, especially against women and people of color.”
After a year they scrapped the system. “When it came down to it, as far as us surviving as a business, it didn’t work,” Adkins says. “It ended up costing too much. It was ‘continue to do this, or not be a restaurant anymore.’”
A February 2018 New Yorker article, “The Limitations of American Restaurants’ No-Tipping Experiment,” points to other restaurants that tried a service-charge model but subsequently went back to tipping. They range from from upscale restaurants like David Chang’s Momofuku Nishi to 18 locations of the casual Joe’s Crab Shack.
Trend-setting restaurateur Danny Meyer of Union Square Hospitality Group implemented no-tipping at his full-service restaurants and is sticking with it even though he initially lost 40 percent of his staff.
Jackie Greenbaum, who co-owns Little Coco’s, Bar Charley, and El Chucho, isn’t likely to institute a service charge. “You’re giving ‘the house’ a lot more power to redistribute the income,” she says. “I’m not sure I trust restaurant owners to do what’s best.” She fears backlash from guests too. “I’d love to put a 20 percent service charge on, but I don’t have the nerve for it. Even at 15 percent, they’ll be pissed if they don’t get to choose.”
Nor does she want to raise prices. “People already feel things are really expensive,” she says. While prices for appetizers and craft cocktails have crept up, entree prices have plateaued. “You’re either under $30 or over. The sweet spot is $18 to $29. You can’t charge over $30 at a neighborhood place … My customers will revolt.”
Greenbaum anticipates another consequence. “It’s going to make restaurants compete against each other in a unique way … You’ll suddenly be judged not on the quality of the restaurant, but what you charge.”
“We have a pile of bad options,” Neighborhood Restaurant Group founder Michael Babin echoes. He owns nine restaurants in D.C. and is weighing the different models in case 77 passes. Like Greenbaum, he thinks mandatory service charges don’t sit well with guests. “As far as raising prices, we want to have great value for our guests and we want guests to be in charge with what they do with their server.”
The ballot initiative comes at a time Babin calls “the golden age of restaurants” in D.C. “Never have people had better access to amazing ingredients locally and from all over the world,” he says. “Guests have benefitted and realized that on some level, it’s all very fragile.”
Some restaurateurs argue that a yes vote on 77 could disrupt the farm-to-table movement. “We’d have to go back to frozen stuff just to be able to not have outrageous prices,” Bayne says. Currently they source their sausage meat from a farm in Maryland.
The director of ROC-DC, Diana Ramirez, is more confident restaurateurs will find a system that works. “They think if workers do better, the restaurant will do worse, but there’s a win-win for everyone in this scenario,” she says. She calls the idea that diners will stop tipping once they know their servers make a higher hourly wage “unfathomable.”
While 77 doesn’t de facto outlaw tips, many servers and bartenders argue patrons won’t be as generous if they’re seeing price hikes on menus or a service charge on checks.
Rekik Tesfaye is a D.C.-area native who has been working as a bartender and server in D.C. for two years. She now bartends at Franklin Hall and sister bar Church Hall and opposes 77. She predicts she’d only see a dollar or two on the tip line if it passes. “The most comparable thing would be when you go to a coffee shop and tip a barista a couple of dollars or some change,” she predicts.
Tipped workers on both sides are using the battle over this ballot initiative as a bullhorn to tell the community that waiting tables and tending bar is no longer a temporary gig or a second choice. It can be a career. Opponents of 77 say they are quick-witted salespeople with strong social skills who enjoy the potential working for tips carries. Supporters counter that $3.33 is a laughable wage to pay a professional.
Michael Haresign, who bartends at Kitty O’Sheas in Tenleytown, opposes 77. He pulls in about $30 an hour even though he mostly sells $3 beers. “When people think about a 20 percent tip, that’s generally not how a lot of us get tipped,” he says. “We get tipped for the fact that we have a skilled job.” He doesn’t want to be reduced to a minimum wage worker. “If you pay us minimum wage, you take away the social aspect of being in this industry.”
Bartender Stephanie Hulbert, who works four shifts a week at Tune Inn, agrees. “I call myself a therapist with alcohol involved,” she says. “People go out to bars and restaurants to relax and relieve stress and we’re there to help them do that.” Hulbert and others say that if 77 passes, employees will know what they’re making going into their shifts and won’t have the same incentive to provide top service. They might do “just enough.”
“Every single table we have is a new boss,” says Karim Soumah. The D.C.-area native has been in the hospitality industry for 17 years and is currently a server at RIS. After he rose through the ranks to reach the management level, he opted to go back to being a server because he likes interacting with guests—and the tips.
Experience has taught him what constitutes a 15, 20, and 30 percent tip. “If I choose to do nothing and follow a script, I’ll get 15 percent,” he says. “If I sell you a glass of wine you’ve never had before and you think it’s great, that leads to a decent tip. A 25 percent tip means you show up to the table and command their confidence.” And a tip can increase to 30 or 50 percent once customers become regulars.
He believes servers shape and are held accountable for diners’ overall experiences. “The back of the house is critical, but guess what? If the food comes out cold, late, or underdone, we have to protect that,” he says. “The front of the house has to protect the image of the restaurant and that is of value.”
The relationship between front-of-house employees and back-of-house employees is often strained. Line cooks and other back-of-house employees typically make minimum wage or slightly more.
“If ownership is forced to give a raise to the people who already make the most money, how long do you think a prep cook or line cook will have to wait for their raise?” asks Joshua Chaisson. He’s one of the leaders of RWA and has worked in restaurants for almost two decades. “Their wages will completely stagnate.”
Some question why no tipping works in most of Europe. “What you experience in other countries is order-taking,” Chaisson says. “The U.S. is revered as the best service in the world. I would strongly argue that is a direct result of our tipped system.” Hollinger and others say there are far fewer servers and bartenders working at one time in European restaurants and generally, they’re hawking food and drink instead of experiences.
“I view servers as a professional class of commissioned sales people,” Greenbaum says. She reasons that servers at IHOP shouldn’t make the same amount as upscale restaurant workers. “They don’t take home wine books to study. They don’t know where their products are from.”
Operators fear that this class of professional tipped workers would potentially flee D.C. or exit the industry if they’re staring down job cuts, reduced shifts, and closures on top of what they perceive to be capped earning potential.
“We have always prided ourselves with being one of the most affordable places on the Hill for 70 years,” says Nardelli from Tune Inn. “Tipped employees will look elsewhere and migrate to other industries because they’re not able to survive on minimum wage.”
Though she owns a dive bar, she continues, “I cannot imagine how white-linen establishments will keep their highly tipped, front-of-house staff from looking to other careers or driving over the District line to Maryland or Virginia to have tipped positions.”
D.C. is unique in that it has two neighboring states with no plans to eliminate the tip credit. According to Andrew Kline, an attorney who has represented D.C. restaurants and the restaurant industry for more than 30 years, city government has been mindful in the past in helping D.C. retain its competitive advantage. He says the District worked in tandem with Montgomery County and Prince George’s County in 2013 to raise the minimum wage at the same rate, for example. That’s not the case this time.
After studying the impact of minimum wage changes in other cities and states, Hollinger concludes labor opportunities will shrink. “The very people they want to help are going to get cut,” she says. “Restaurants are going to have to do more with less. They’ll absolutely need to reduce shifts.”
Trupti Patel, who has been a server and bartender for seven years in D.C., offers a different view. She is in favor of 77 and does not want her employer named. While Patel predicts there will be labor cuts since a restaurant can’t afford to keep 10 servers on the clock if they’re paid $15 instead of $3.33, she doesn’t think service will suffer. “The consumer is going to want better service,” she says. “If they realize the server is being paid $15, they’re going to expect $15-an-hour service.”
Patel is one of the supporters who believes that, as a professional, she deserves 100 percent of a wage. She’s a ROC member. The organization says it has 1,200 local members. “Wouldn’t it be nice to get paid where you’re not worried if you’re having a slow day?” she asks. “You have one bad week in the industry and everyone is freaking out over how to pay the bills.” The public presumes servers make $100 to $300 per shift. “If this were the case, this wouldn’t have come up,” she says.
Anything from bad weather to a bad mood can impact a tipped worker’s earnings. Yet, when point-of-sale company Upserve conducted a survey in 2018, they found that 97 percent of servers ranked tipping as their preferred payment method. They surveyed 1,000 front-of-house and back-of-house employees at their 8,000 restaurant clients nationwide. While 91.2 percent of tipped workers said their income fluctuates, it’s only by $500 between their best and worst month.
Patel disagrees with operators who think dining will stagnate. “People will not stop going out to eat,” she says. “We don’t live in a town where people don’t go out to eat. They might not go out as often in the beginning, but people will adjust.” Some compare 77 to the debate surrounding the smoking ban that passed in 2006. Operators thought it would put bars out of business. It didn’t.
Ward 3 Councilmember Mary Cheh was an early supporter of eliminating the tipped minimum wage. Back when the D.C. Council was drafting legislation related to raising the standard minimum wage incrementally to $15, Cheh says she offered an amendment to make it one wage. Her support hasn’t wavered. She welcomed the news that 77 was on the ballot, though she thought it was scheduled for November, not June. “I’ve done my homework,” she says. “My instinct about having one wage is borne out of a notion of fairness. Tipped wage workers are entitled to the same minimum wage.”
Her office supplied her with data from the Economic Policy Institute, Bureau of Labor Statistics, Harvard Business School, and the UC Berkeley Labor Center. She sympathizes with business owners who don’t want to pay more, but says fairness must prevail. Restaurant owners are letting her hear it. “When they call me, sometimes I have to hold the phone out at a distance because they’re irate,” she says.
Cheh doesn’t think diners will stop tipping. “We have a tipping culture; we’ll remain a tipping culture,” she says. Nor does she think restaurants will need to raise their prices by 30 to 40 percent because the roll-out is gradual.
“In terms of restaurants closing, there is some indication that for those who were about to make an exit anyway, this could be the last straw,” she says. Indeed, a 2017 Harvard Business School working paper found those shuttering and blaming it on minimum wage increases were already rated poorly on Yelp. The paper reads, “a one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of exit for a 3.5-star restaurant, but has no discernable impact for a 5-star restaurant.”
Woong Chang came to D.C. in 2009 and blanketed the city with his resume. In one interview, he told a restaurant owner that he expected to make $10 to $12, plus tips. That’s what he made in California where he worked in Oakland, Berkeley, and San Francisco. He says the owner laughed in his face and told him they pay $2.77 (the tipped minimum wage at the time) plus tips. “I thought he was joking,” Chang says.
The experience inspired Chang, who works part-time at Maketto, to get involved with ROC and lead the local fight for One Fair Wage. He’s also on ROC’s national board of directors. He says every time there’s an effort to increase the minimum wage, a doomsday scenario surfaces. “It’s been done in seven states,” he says. “I’ve worked where this is thriving,” he says.
In addition to arguing that tipping won’t cease if 77 passes, ROC makes two social arguments against tipping. “It’s a racial justice issue for us,” Ramirez says. “The practices of tipping are a legacy of slavery. And the most important issue is that the two-tiered wage system is the highest source of sexual harassment.”
ROC co-founder Saru Jayaraman’s 2016 book, Forked: A New Standard for American Dining, has a section on the history of tipping. She points to the late 19th century when many former slaves took up employment in the hospitality and railway industries but were only paid in tips. She says the “deeply rooted racial subjugation” continues today.
According to ROC, 69 percent of tipped workers in D.C. are people of color, and tipped workers experience poverty at nearly twice the rate of all workers. The organization cites the Census Bureau’s “American Community Survey” that merges data from 2010 to 2014.
Imar Hutchins owns the Florida Avenue Grill, one of the oldest surviving, continuously operating African-American-owned restaurant in the U.S. “We should have something to say about issues like these,” he says, calling tipping a vestige of slavery. Like Jayaraman, Hutchins points to train car company employees. “They supported themselves off of goodwill and charity, and that essentially continues today.”
Hutchins supports 77, but hasn’t thought about how his restaurant would manage the increased labor costs. “I don’t have all of the answers,” he says. “I don’t know what we would do here yet, but I know there are several states that have laws like this and they keep spinning.”
Several African-American tipped workers disagree that tipping puts them in an inferior position. “They say that minorities aren’t benefiting from the pay structure at restaurants,” Soumah says. “That’s a naked statement. Are they saying African-Americans have no shot? Are underpaid? Are underrepresented? I will say as an African-American, I found no barriers to my success.”
Tesfaye denies that tipping evolved from slavery and says proponents of 77 are using “trigger phrases” to get votes. “Tipping is not racist at all,” she says. “It has nothing to do with slavery. It started in the 1800s in Europe.” A New York Times article about tipping states that after the Civil War, wealthy Americans began traveling to Europe where they picked up on tipping and brought it home.
“I know they slant this to say it will benefit people of color and women—it’s sort of a tearjerker for people,” Tesfaye says. “If you don’t want to work in the service industry, you don’t have to … People stay in it because they make good money and enjoy it. You can’t look at me and think, ‘She’s a single mother. She’s bartending because she has to.’ That’s not my story.”
As for sexual harassment, ROC and Forward Together, an organization that wants all families to be able to thrive, conducted a survey that revealed tipped female restaurant workers in states where the sub-minimum wage for tipped workers is $2.13 an hour are twice as likely to experience sexual harassment as their female cohorts in states that pay one minimum wage to all workers. ($2.13 is the federal tipped minimum wage.) They surveyed 688 current and former restaurant workers across 39 states for their 2014 report, “The Glass Floor: Sexual Harassment in the Restaurant Industry.” Of the 688 workers surveyed, 77.4 percent were women.
ROC also says that 90 percent of restaurant workers in D.C. report sexually harassing behavior in the workplace. To obtain this figure, ROC gathered 25 surveys from local tipped restaurant workers for its May 2016 report, “The Case for Eliminating The Tipped Minimum Wage in Washington, D.C.” Instead of using the words “sexual harassment” explicitly, the survey asked about behaviors such as sexual teasing, pressure for dates, and comments about sexual orientation. They combined these surveys with 26 more that were completed for the “Glass Floor” report for a data set of 51 tipped workers.
The idea is that when workers depend on tips for income, they’re more likely to put up with perverse behavior from patrons. “It’s not just the patrons, but the managers who have power over the shifts you get scheduled for,” Ramirez adds. “It’s about power dynamics. Everyone in restaurants has power over the tipped worker. My sister worked in Hooters for many years. The women who got the better shifts were the ones who went on dates with the manager.”
Greenbaum calls the stance that tipping encourages sexual harassment insulting because it perpetuates a stereotype that servers are still cocktail waitresses in slinky black dresses serving customers a meal and a show. “We have uniforms,” she says. “If anyone came dressed inappropriately, they’d be sent home.”
She continues, “It suggests that my incredibly skilled bartenders who can make 18-ingredient cocktails also have time and an inclination to flirt and a wear a low-cut V-neck and bendover. It’s not how bartenders and servers make money.”
If a customer touched one of her employees, Greenbaum says she would eject them, but she hasn’t had to do that. “The suggestion that they’re butt-pinching older dudes is not true.”
Hulbert also has a perspective. “When I’m behind the bar, I’m more concerned about my patrons,” she says. “I would never take what a customer is throwing at me just to make higher tips,” she says. “Tune Inn is a woman-owned bar—we are treated with the utmost respect.”
Sexual harassment is pervasive in society and especially in places where there’s a power dynamic. That includes all industries and all sectors, but particularly restaurants. Restaurant workers file more sexual harassment claims than any other industry, according to Equal Employment Opportunity Commission data first reported by Buzzfeed. More than 10,000 claims were filed by full-service restaurant employees from 1995 to 2016. The study does not say if and how increasing the tipped minimum wage stanches the flood of unwanted sexual advances.
D.C. voters must ask themselves whether “One Fair Wage” is a fit for the District. Some argue it’s not because of the city’s size and restaurant portfolio. Others point out that there are two D.C.’s—neighborhoods with upscale restaurants may not have much in common with the areas dotted with mom-and-pop eateries and the occasional casual national chain.
“When they talk about the kind of worker they’re trying to help, they talk about Denny’s, IHOP, and Applebee’s,” Hollinger says. “We have more than 2,000 restaurants in D.C. and maybe five of the establishments they’re referring to. I don’t think they understand this market.” There are four of these full-service chains—two Denny’s and two IHOP’s.
Based on U.S. Economic Census data, Hollinger says 96 percent of District restaurants are independently owned small businesses. “I know our operators,” Hollinger says. “We’re small enough that if employees weren’t being taken care of, or they felt there were unjust circumstances, we would be hearing about it.”
The RAMW CEO believes D.C. servers make an average of $25 to $50 an hour. “It’s probably far more than that, but we’re looking at the entire range of establishments,” she says. “If you’re talking about fine dining, it’s closer to $65 or $70.” Industry veteran Nadine Brown told Afro that as a lead server at Charlie Palmer Steak she earned $70,000 annually.
Soumah feels ROC is painting with too broad a brush. “They’re looking at the nation as a whole and they’re considering the inequalities on a very basic level for those who are in suburbia and small towns,” he says. “The demographics and the numbers in D.C. are so conflicting with what they’re trying to accomplish.”
Tesfaye worries that if 77 passes, it will pave the way for big chains to plant roots in the District because they’re better equipped to absorb increased labor costs. “Rents are already hiking and restaurants are already closing down and corporate chains are coming in like the new Yard House in Chinatown,” she says.
For many D.C. operators, rent is partially based off of a percentage of their sales. For example, a lease could require an owner to pay $200,000 in base rent plus 6 percent of their gross sales once they cross a natural breakpoint. Jared Meier, a vice president of CBRE Retail Services, explains how this works.
“Take $200,000 and divide by .06 and that would lead to a 3.333 million gross sales figure—the natural breakpoint,” he says. “Every dollar over 3.3 million in gross sales, the tenant would pay six cents in additional rent to the landlord.” Industry leaders like Bayne fear that if they’re achieving higher sales as a result of significantly increasing their prices, landlords may not be willing to come to the table to re-negotiate lease terms.
Operators like The Pub & The People co-owner Jeremy Gifford worry that D.C. is being used as an experiment. “Let’s not be a training ground for new policy to roll across the country. We’re not California,” he says. “We’re a tiny little city that will never become a state.”
Proponents of 77 argue having One Fair Wage will level the playing field between the two D.C.’s. “There’s this golden city full of young white millennials that are working in technology and politics, and there’s a forgotten D.C.,” says Justin Zelikovitz, a wage theft attorney at DCWageLaw. He’s represented almost 1,000 low-wage workers in D.C. and Maryland over the past five years. “Old D.C. understands that people of color and socioeconomically disadvantaged people that work in restaurants get screwed.”
According to May 2017 data from the Bureau of Labor Statistics, there are 8,440 servers in D.C. Their hourly mean wage is $17.48 ($36,370 annually). By contrast, their median wage is $11.86. That means half of servers earn less than $12. The numbers increase for bartenders, of which there are 4,290 in D.C. Their mean hourly wage is $18.29 ($38,050 annually), while their median hourly wage is $15.05. These figures include tips, though restaurants don’t always report their employees’ tips accurately, especially if they’re in cash form.
Zelikovitz points to a category of tipped workers that the typical diner may not consider. “Employers will fudge the numbers most commonly with positions like busboys,” he explains. “They’ll say, ‘He got a bunch of tips and that brought him over minimum wage, but just didn’t report them.’”
Juan, who asked to be identified by his first name, worked as a busboy for a large D.C. restaurant for two-and-a-half years. He says he was paid $2.50 an hour and $380 in tips every two weeks. These figures do not add up to the minimum wage, but Juan didn’t bring the disparity to his boss because he feels busboys are replaceable.
Now Juan works in construction and makes $15 an hour. “There’s more opportunities, the pay is better, and they respect the minimum wage,” he says through a translator. The 32-year-old doesn’t have to work two jobs for the first time since he was 16. He suspects more workers will leave restaurants for industries that guarantee minimum wage. “Change is necessary,” he says.
Zelikovitz says some workers aren’t being paid a base wage at all, they’re living solely off tips. “These are the workers getting hosed—not servers at Le Diplomate or Del Mar where they clean up.”
On May 3, more than 100 restaurant owners signed an open letter asking Washingtonians to vote no on 77. Though the letter includes some neighborhood bars and casual restaurants, the list of signatories is mostly a who’s who in D.C.’s elite restaurant scene—Pineapple & Pearls’ Aaron Silverman, The Dabney’s Jeremiah Langhorne, Sushi Taro’s Jin Yamazaki, and Tail Up Goat’s Jill Tyler.
Zelikovitz suspects the higher-end restaurants and constituents of RAMW do things by the book. “But they have to compete with restaurants that don’t,” he says. “This increase in the tipped minimum wage will remove a common way that lower-end restaurants skirt the hourly laws. This will make it so clear who is doing it right and who is doing it wrong. It’s my intention to sue every restaurant that’s doing it wrong.”
Chang cites a U.S. Department of Labor study conducted from 2010 to 2012 that looked at nearly 9,000 investigations at full-service restaurants nationwide and found an 84 percent noncompliance rate with wage laws. “Those are the tipped employees that work at the not-so-popular restaurants where making $100 in tips is unfathomable,” he says. “You’re damn right it’s an enforcement issue.”
ROC calls the current system, where employers are required to make up the difference should a worker not make minimum wage with their base wage plus tips, “complex” and “largely unenforceable.” It puts the responsibility on the employee to report low wages to the employer and requires extensive tracking and accounting. Patel and other 77 supporters feel that if there was One Fair Wage, the law would be easier to enforce.
Andrew Kline, the chief counsel for RAMW, has a different take. “I don’t think it’s nearly as bad as they say it is—there would be a lot more lawsuits,” he says. “We see some cases because we represent restaurants. We don’t see zillions of them, but we see them. They get settled and the people get paid.”
According to D.C. law, a worker who wins a wage lawsuit is entitled to their wages, plus three times that in liquidated damages. So if someone works ten hours and gets paid $10 an hour (instead of $12.50), they’re owed $25 plus $75 for a total of $100. And the defendant would have to pay the attorney’s fees.
The DC Department of Employment Services sheds light on how many complaints they see annually. According to Dr. Unique Morris-Hughes, DOES audited 593 hospitality industry businesses in fiscal year 2017. These bars and restaurants had 7,383 employees. She received fewer than five complaints.
Morris-Hughes says her office monitors for irregularities when businesses have tipped workers. The input system isn’t perfect. “I call it a fat finger issue because they’re keying manual entries,” she says. “A lot of businesses contract out the work and miss-transpose the data.”
DOES aims to ensure residents are informed of their rights by providing materials in different languages and by signing memoranda of understanding with organizations that serve specific communities, according to Morris-Hughes. Anyone can file a complaint, and complaints can be anonymous. “We don’t care where it comes from, we’re committed to ensuring people’s rights are protected,” she says.
Greenbaum, who says an average-performing server at one of her restaurants earns more than $27 an hour, believes there are other incentives for obeying the law. In D.C., the industry is staring down a major staffing crisis due to the explosion of new dining neighborhoods like The Wharf. “Servers are free agents, especially today with the skill sets they’re required to possess,” she says.
RWA’s Chaisson would like to focus on enforcement instead of nixing the tip credit. “If ROC or any organization wanted to create legislation to make stiffer penalties for people who fail to meet the obligation, I would stand beside them and fight that fight,” he says.
Seven states do not have a two-tiered wage system: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. How tipped restaurants and their employees are faring there depends on who you ask.
The East Bay Times published an article in January 2017 that says 60 restaurants around the Bay Area had closed since September 2016. The executive director of the Golden Gate Restaurant Association said that full-service restaurants “are being pushed to the brink.”
Find Simone Barron further north in Seattle. She’s been a server for more than three decades and currently works for a well known restaurateur. She’s also sits on the RWA board. Seattle was the first metropolis in the U.S. to begin scaling up to $15 an hour. Businesses with 500 or more employees already hit $15 in January 2018.
Barron’s restaurant instituted a 20 percent service charge to cope with the changes. There is no line for additional tips on checks. Since Barron is a senior server she makes 14 percent commission. More junior employees make 10 percent. “I’m losing about $30 a day,” she says. “There’s no way to maximize a tip on anything.”
If Barron sells $100 worth of food, she gets $14. To get to a $100 commission in a shift, a tip goal that many servers set, she has to sell about $750 worth of food. Before she only had to sell $500. “Service doesn’t matter—it’s about pushing the most expensive things on the menu.” Because of the pay cut, Barron now works six shifts in five days and picked up a second job. “For someone like me who’s been in the business for 32 years, I’m older and this is hard,” she says.
ROC says the restaurant industry is healthy and growing in the states that have no tip credit. Specifically it says Seattle, San Francisco, and SeaTac restaurants are thriving. One of the sources it cites in a report is a March 2016 Seattle Times article, “A Year in, ‘The Sky Is Not Falling’ From Seattle’s Minimum-Wage Hike.” In it, a professor of public policy and governance concludes that it’s too early to predict the long-term impacts of incremental wage increases.
Over the next five-and-a-half weeks, Washingtonians can expect to hear more from both sides. ROC members and tipped workers who oppose 77 have been participating in town hall meetings and joining Facebook groups. The Save Our Tips and One Fair Wage campaigns are also getting some company.
John Guggenmos, the owner of Town, Trade, and Number Nine, created a “NO2DC77” initiative committee. He says tipped workers at his gay nightclubs currently earn between $25 and $50 per hour. “Once we go to a 20 percent service-included model, they will make less than they’re making now as tipping will stop altogether.”
He calls 77 a dangerous experiment and says he’s hired media consultants to spread the word. They’re going to print cards for bartenders to hand to patrons and will be producing 30-second videos with tipped worker testimonials.
Peter Bayne has a plan for June 19. “We should close down all of our spots during this election and have our staff go out to polling places,” he says. In addition to Franklin Hall and Church Hall, Bayne co-owns Penn Social and Big Chief. “I think every restaurant should close on Tuesday to say ‘We care so much about this, don’t destroy this beautiful industry.’”
Initial polling suggests opponents of 77 are facing an uphill battle. A leaked survey obtained by The Intercept conducted by GOP pollster Frank Luntz on behalf of the National Restaurant Association found that seven in 10 Americans want to see a higher minimum wage, even if that means paying more for meals.
Here at home, Ed Lazere, who is running for Council chairman, conducted a 12-question phone survey in early April. He’s on leave as the director of the DC Fiscal Policy Institute, a left-leaning think tank. The results showed 70 percent of respondents support raising the tipped minimum wage so that tipped workers earn the same rate as every other minimum wage worker. Fifteen percent said they oppose the idea, another 15 percent were unsure.
Tipped workers like Soumah remain optimistic that he and his colleagues can convince D.C. that, though counterintuitive, giving tipped workers a raise would do more harm than good. He’s helping organize informational happy hours at area restaurants.
“We will prevail,” he says. “I think this is an opportunity for us to highlight exactly what we provide for the city.” His advice to his colleagues? “Get educated, take pride in your job, and let everyone know this is on the ballot. Let people know what you do is of value. The entire city will support us if they know what’s going on.”