Don’t Bite the Hand that Feeds You!

I love restaurants, not only for the food they serve, but for the job opportunities they provide. I worked in restaurants from age sixteen through my first year of law school. I started out serving coffee and ice cream behind the counter at the dairy in a rural town in western New York and was quickly promoted to the dining room to serve Friday night fish fries and Sunday brunch. I saved every dime I made because I was determined to go to college and get away from the cows and cornfields of my hometown. I chose The George Washington University–smack dab in the middle of Washington, DC. Thanks to a scholarship, loans and my hard-earned tips, I could afford to go to GWU even though money was tight (my father was in the business of developing and selling houses when interests rates were 18%.) With so many restaurants near GWU, it was easy to structure shifts around my full load of classes. In the summer between my freshman and sophomore year, I didn’t go home because I needed to make money (and had no money to travel home, anyway). I rented an apartment with two other women and we all worked in restaurants. I worked in three restaurants that summer:  Swensen’s Ice Cream, Dominique’s (which served rattlesnake!) and Luigi’s. Crazy? Not at all. I got to meet lots of interesting people, make money and eat good food for free or at a significant discount. The summer between my junior and senior year of college, I worked for Garrett’s restaurant. I met my husband who tended bar there (in addition to his post-college entry level IT job). His family friend owned Garrett’s and we ultimately had our wedding reception and my law school graduation party there. Seventeen years after we met, we had a son. We named him Garrett.

My brother has worked in the restaurant industry for 30+ years. Despite knowing the overhead costs, the low profit margins, and myriad of regulations associated with running a restaurant, in late June 2018, with some family help, including free legal advice from me, he purchased and opened a restaurant/bar. He is working 14-hour days, 7 days a week. He is not complaining. It’s a “dream come true.”  He is going to be successful because he knows the restaurant business, is willing to work hard and, thankfully, his restaurant is not in the District of Columbia.

On June 19, 2018, voters in the District of Columbia primary elections approved ballot Initiative 77. If Initiative 77 is not overturned by Congress or the DC Council, restaurant owners will have to pay workers that customarily receive tips the same base minimum wage that is required to be paid to non-tipped employees. Such a result will radically alter the restaurant wage structure that restaurant workers and owners have relied on for decades and will benefit no one.

I learned of Initiative 77 in the weeks leading up to the primary while watching the local news. The reasons offered in support of Initiative 77 were infuriatingly flawed and misleading. The reports and interviews with Diana Ramirez, the Director of Restaurant Opportunities Center of DC, implied that tipped workers are not required to be paid the minimum wage and that they are at the mercy of the customer for their wages. Report after report conveyed this false message. Even when the reporters interviewed tipped workers that did not support Initiative 77, the implication was that they were the minority who worked in “high price establishments” and who didn’t have the problems that Ramirez aimed to address.

In fact, DC restaurant employers have always been required to pay all employees at least the minimum wage, which currently is $12.50 an hour, but scheduled to reach $15.00 an hour by 2020 (standard minimum wage). As for workers who customarily work for tips, such as servers and bartenders, employers must pay them a base minimum wage of $4.50 an hour (TM wage) and allow them to keep all tips received from customers. If the tipped worker does not receive tips in an amount that when added to the TM wage equals the standard minimum wage, the employer is required to supplement the tipped employee’s TM wage, so that the tipped worker makes at least the Standard minimum wage (i.e., $12.50 an hour). Rarely do DC employers have to supplement the tipped employee’s TM wage because most tipped restaurant workers make more than the minimum wage. For this reason, many tipped restaurant workers were part of the “Save Our Tips” movement that opposed Initiative 77.

The actual text of ballot Initiative 77 is the best evidence of its misleading premise. Voters were asked to vote “yes” or “no” to “Gradually increase the minimum wage for tipped employees so that they receive the same minimum wage directly from their employer as other employees by 2026.” Perhaps we can take comfort that the ballot initiative was so poorly written and confusing; it makes it much easier for Congress or the DC Council to overrule it due to the likelihood that voters were led to believe erroneously that employers were not obligated to pay tipped workers the established minimum wage.

Initiative 77 should be overruled not only because it was passed based on a false premise, but because it will hurt workers, restaurant owners, and the public. Basic economics dictates that to absorb the drastic increase in labor costs that would result from Initiative 77, restaurant owners will have to raise prices and/or cut shifts and restructure staffing and/or charge customers a service fee that will reduce, if not replace, tipping. Servers and bartenders will lose the higher than minimum wage they have come to expect. Initiative 77 threatens the viability of small restaurants and the higher-paying low skill jobs they offer. (I can envision new entrepreneurs replacing expensive and unreliable labor with technology; perhaps touch pad devices to take orders and robots to deliver the orders to the tables?) The public will have to pay more for less service and a diminished experience.

The misinformation ROCDC and the media spewed in support of Initiative 77 was not limited to minimum wage requirements. ROCDC conflated and tangled wage and hour laws with all the hot social issues:  poverty, distribution of wealth, discrimination, sexual harassment, retaliation, illegal and unfair employer practices, and immigration law and politics. According to Ramirez, ROCDC is comprised of mostly “women, people of color and immigrants who can’t make ends meet with the current tipped employee base wage.” Again, the current base wage for tipped workers is only the starting point upon which tips are added, the employer must supplement the base wage if the tips are insufficient to equal the standard minimum wage, and most tipped workers make more than the minimum wage. Whether anyone living in DC can “make ends meet” working for minimum wage is a separate question. What is not a legitimate debate, however, is ROCDC’s proposition that fairness requires private restaurant employers to pay compensation sufficient to ensure their employees can make their ends meet. As John D. Rockefeller said:  “I believe in the dignity of labor, whether with head or hand; that the world owes no man [or woman] a living but that it owes every man [or woman] an opportunity to make a living.” The current restaurant wage structure provides this opportunity. Initiative 77 infringes on this ideal.

ROCDC also argued that restaurant employers get away with not paying the minimum wage due to lack of enforcement and because workers don’t report violations out of fear of retaliation. Even if these unsubstantiated positions were true, they are red herrings. If restaurant employers aren’t complying with the laws now, how would raising the base rate through Initiative 77 help those employees who work for such unscrupulous employers? Given that we live in a democracy, how is it that the ROCDC would have the laws enforced if no one is aware of the breaches because the victims aren’t reporting the violations? We need not seriously entertain these questions because, in fact, the federal, state and local departments of labor provide employees (as individuals or as class action members) sufficient means through which to raise wage and hour law violations and have them remedied and protected from retaliation with the assistance of government agency personnel. Wage and hour law violations are vigilantly enforced because they not only hurt the workers, they hurt honest employers; violators have an unfair competitive advantage if they do not comply with the wage and hour laws. As such, the laws encourage employees to bring claims by providing for liquidated damages (amounts in addition to the wages due) and attorneys’ fees. The agencies’ services and the remedies are available to the employee even if s/he is working illegally as an unauthorized worker (undocumented immigrant). The employer, who violated immigration law by hiring the unauthorized worker, cannot benefit from the illegal conduct; the employer must pay the unauthorized worker in accordance with the wage and hour laws.

The most disturbing of ROCDC’s positions is that Initiative 77 is needed to help women who work for tips and who have to put up with customers’ sexual harassment because they can’t afford not to receive a tip from the harassing customer. Even if sexual harassment by customers was as prevalent as ROCDC suggests, it is ludicrous to suggest that raising the minimum base wage for tipped workers is the solution to the problem. No woman should have to tolerate sexual harassment by a customer regardless of how much she makes. The real remedy for women who are subjected to such behavior is information about their legal rights and how to pursue them. Women who are subjected to sexual harassment in the workplace by coworkers, customers, or vendors should notify their employer, so that the employer can take proper action. An employer has a legal obligation to investigate and respond responsibly. If the employer breaches its duty to the employee, the employee should file a claim with the DC Office of Human Rights (or other state equivalents) or Equal Employment Opportunity Commission.

So, what to do about Initiative 77? First, all businesses in the District of Columbia, not just DC restaurant operators, should closely monitor Congress’ response and/or the DC Council’s actions, as well as make themselves heard. Let legislators know that the increasing cost of labor, due to minimum wage increases and the numerous paid sick leave laws, is a key contributor to both stagnant wages and wage disparity due to the loss of higher paying low skilled jobs and the small businesses that offered those jobs. Second, we should remember to always think critically. Those who purport to represent the disadvantaged often times do not have the knowledge, skills, education or experience necessary to define the issues or carry out their good intentions. Those who provide jobs and run businesses skillfully and in compliance with the law are the real community leaders who are able to make dreams like mine and my brother’s come true.