The Portland City Council has amended the minimum wage ordinance it passed last year to bring employers’ payments to tipped workers in line with a new state law, but with so much on the line for Portland’s booming restaurant industry, the issue is far from being resolved.

The new state law, approved by voters Nov. 8, raises Maine’s hourly minimum wage from the current $7.50 to $12 by 2020, and the minimum employer-paid cash wage for workers who rely on tips from the current $3.75 to $12 by 2024. The increase will occur incrementally, starting with a $9 minimum wage and $5 minimum employer-paid cash wage for tipped workers in 2017. The tipped employee’s hourly wages and tips over a single pay period must add up to an average of at least $9 an hour, or the employer has to pay more to bring it up to that amount.

In July 2015, the Portland City Council increased the city’s minimum wage from $7.50 to $10.10 in 2016 and $10.68 in 2017. Initially, the council also raised the minimum employer-paid cash wage for tipped workers to nearly $7 an hour by 2017, but it quickly reversed that decision and set the employer-paid minimum back to the state minimum of $3.75. At the time, then-Mayor Michael Brennan said the council had misunderstood the initial vote’s impact on tipped workers.

On Monday, the Portland council amended the ordinance again to raise the city’s minimum employer-paid cash wage for tipped workers to $5 an hour in 2017, identical to the new state minimum. It did so by stating that the “tip credit” – the amount employers are allowed to subtract from the hourly minimum wage for tipped workers – would permanently match whatever amount was set by the state.

“The city’s ordinance was just amended so that the tip credit/direct wage to the tipped worker language would be consistent with the new state law that goes into effect in January 2017,” Portland spokeswoman Jessica Grondin said via email. “It is really the same policy direction regarding minimum wage that the City Council had enacted before – that is, raise the minimum wage at the city level, but keep the tip credit/direct wage to the tipped worker the same as provided for in state law.”

The change was necessary to keep Portland’s employer-paid minimum for tipped workers from running afoul of state law while still allowing the city’s minimum wage to exceed the statewide minimum for the next two years. In 2019, the statewide minimum wage will become $11 an hour, exceeding the city’s $10.68 minimum wage and effectively invalidating it.

However, city officials noted that they reserve the right to pass future minimum wage increases or other changes. Portland and other cities are free to raise their minimum wages to amounts higher than those required by state law.

LEGISLATIVE CHANGES PLANNED

While Portland’s ordinance is now aligned with the new state law, opponents of the wage increase for tipped workers, primarily those in the restaurant and hospitality industries, will be looking to the Maine Legislature for relief. As of Dec. 15, though, no working titles of proposed bills for this session address changes to the new minimum wage law.

But business groups already have signaled their intentions to push to get the new minimum wage law modified. Among the changes under consideration are reinstating the tip credit, eliminating future wage increases indexed to inflation, establishing a minimum training wage, and adopting a differential in areas of the state with weak economies where a $12 minimum wage would cause hardship on small businesses.

A Facebook group calling itself Restaurant Workers of Maine has started a petition drive to pressure state lawmakers to reinstate the tip credit, which is set to be phased out by 2024 under the recently approved state law. They expressed fear that eliminating the tip credit could force customers to stop or decrease the amount they tip wait staff, cause restaurant owners to raise menu prices, and eventually force them to lay off workers.

Gov. Paul LePage also has expressed his desire to see the tip credit elimination repealed.

However, the lead organizer of the statewide minimum wage increase campaign, Amy Halsted, has said it would be unwise for state lawmakers to defy the will of the people by trying to water down the voter-approved initiative. She said studies of other states with minimum wage increases similar to Maine’s show that restaurants and other businesses with tipped workers have not been hurt by the changes.