Business advocates say they tried for months to warn Portland’s mayor and city council that a proposed ordinance to raise the city’s minimum wage would have unintended consequences for employers whose workers receive tips.

Yet, Mayor Michael Brennan and other city elected officials expressed surprise this week that the ordinance they passed on Monday, increasing Portland’s minimum wage to $10.10 an hour on Jan. 1, will raise the amount businesses are required to pay tipped employees such as servers and bartenders from $3.75 to $6.35 an hour. That was not supposed to happen, they said.

City councilors who voted for the ordinance said Wednesday that they had done so believing that tipped workers would continue to receive the state-mandated minimum base pay of $3.75 per hour.

Greg Dugal, executive director of the Maine Innkeepers Association and president and CEO of the Maine Restaurant Association, said he can’t understand how that belief was able to persist, given that he and others continually warned the council it was probably wrong.

“It wasn’t just us – there were restaurateurs that spoke about this, too,” Dugal said. City officials forged ahead with an ordinance they did not fully understand, without consulting state or federal labor officials, he said.

Now, the councilors are calling for a do-over.

Under the council rules, any member who voted on the prevailing side can call for a reconsideration of that vote at the next meeting.

City Councilor Jill Duson said Wednesday she had done exactly that, and expected the council to revisit the issue on July 20.

“I don’t think we should be sitting around looking confused,” Duson said. “I think we should get back into the room and do a little more work. We should fix this immediately.”

City Councilor Jon Hinck, a co-sponsor of the amendment that created the higher minimum wage, said it was not his intent to increase the base wage of tipped workers.

“That language needs to be sorted out,” Hinck said.

The council voted 6-3 Monday night to raise the minimum wage in Portland to $10.10 an hour on Jan. 1, increase it to $10.68 a year later, and tie future minimum wages to inflation. The ordinance also states that workers who receive tips are subject to state and federal labor laws, the more stringent of which is a Maine law allowing employers to pay tipped workers up to $3.75 an hour less than minimum wage through what is known as the tip credit. In Maine, the state minimum wage is $7.50, but employers only have to pay tipped workers $7.50 minus $3.75, which equals $3.75.

Raising the minimum wage while leaving the tip credit the same increases the amount employers are responsible for paying. If the tip credit is $3.75 and the minimum wage is $10.10, then the employer must pay a base hourly wage of $6.35. It will rise to $6.93 in 2017 and be adjusted according to inflation thereafter.

During a public hearing that preceded the vote, Duson asked Portland Corporate Counsel Danielle West-Chuhta if the ordinance would leave the tip credit at $3.75.

West-Chuhta correctly explained that the tip credit would remain the same.

“What’s in Councilor Hinck’s proposal is tracking the language of the state statute,” West-Chuhta said during Monday’s meeting. “So it’s saying that the state statute currently provides the tipped wage credit can be 50 percent of the state minimum wage, or $3.75, so that’s what the current credit would be.”

“And it’s not in any way tied to what the municipal wage would be?” Duson asked.

“That’s correct,” West-Chuhta responded.

Nevertheless, Duson and five other councilors voted for the ordinance.

Dugal said it was frustrating to realize that after months of discussion and numerous explanations, the mayor and councilors still did not appear to understand how a tip credit works.

“It was the most surreal thing,” he said.

Portland restaurateur Michelle Corry, who owns three establishments in the city, including Five Fifty-Five restaurant, said Dugal had tried on several occasions to explain the tip credit.

“This issue has been brought up over and over and over,” Corry said. “(Dugal) even offered to help with the rewrite in order to get it correct.”


Steven DiMillo, owner of DiMillo’s On the Water restaurant in the Old Port, said he hopes the council amends the ordinance to reflect its original intention of keeping the minimum wage for tipped workers at $3.75.

DiMillo estimated that raising it to $6.93 would cost him more than $60,000 a year, and that his servers already make up to $35 an hour.

“We’re talking about over $60,000 a year more to give the highest earners in the restaurant a raise in pay,” he said.

Not everyone wants the council to roll back the pay increase for tipped workers.

The city’s minimum wage proposal originally applied to tipped workers, but it faced strong opposition from the restaurant industry, which wields influence throughout the state, especially in Portland.

The pro-labor Maine People’s Alliance is working on a referendum drive to ultimately raise the statewide minimum wage to $12 and eliminate the tip credit altogether, as seven other states have done.

Alliance spokesman Mike Tipping said the uproar over city officials misunderstanding the ordinance’s impact has drowned out the more important message that thousands of workers in Maine are not earning enough to live on.

“My position on it is that the whole conversation is ridiculous,” Tipping said. “We should have one fair wage for all workers.”

Staff Writer Matt Byrne contributed to this report.

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