Rep. Ryan Fecteau

Rep. Ryan Fecteau


AUGUSTA — New legislation to restore the “tip credit” to Maine restaurants in efforts to compromise on minimum wage regulations approved by voters in November earned the support of members of the Labor, Commerce, Research and Economic Development Committee on Wednesday.

Members of the bipartisan committee, known as LCRED, voted on a compromise to protect voters’ decision to raise the minimum wage to $12 an hour by 2020 while restoring the tip credit, which allows restaurants to pay workers below the minimum wage as long as their tips cover the difference.

The committee, co-chaired by Rep. Ryan Fecteau, D-Biddeford, said a nearly 15-hour public hearing in April saw hundreds of servers from across the state testify about the potential impacts of removing the tip credit.

The facade of Custom Deluxe is pictured in February. A new bill in the 128th Legislature, with amendments from Rep. Ryan Fecteau, D-Biddeford, would restore the tip credit to Maine’s tipped restaurant workers. JOURNAL TRIBUNE FILE PHOTO/ALAN BENNETT

The facade of Custom Deluxe is pictured in February. A new bill in the 128th Legislature, with amendments from Rep. Ryan Fecteau, D-Biddeford, would restore the tip credit to Maine’s tipped restaurant workers. JOURNAL TRIBUNE FILE PHOTO/ALAN BENNETT

“What I was able to conclude was that the majority of servers did want the tip credit reinstated,” Fecteau said by phone Friday. “What I also know … is that the policy that existed before the referendum passed in November was not perfect and there were ways we could improve the tip credit policy.”

Fecteau said the new bill, LD 673, “An Act To Restore the Tip Credit to Maine’s Minimum Wage Law,” not only restores the tip credit, it adds additional safeguards to protect workers’ wages.

Federal law allows restaurant owners to pay tipped workers 50 percent of the minimum wage as long as tips make up the difference; if they don’t, restaurant owners are required to cover the gap.

The minimum wage for tipped workers in Maine is $5, according to the Maine Department of Labor. The state’s minimum wage, as of Jan. 7, is $9 an hour, up from the previous minimum of $7.50.

An amendment to the bill put forth by Fecteau requires employers to reconcile wages every seven days while also prohibiting restaurants from removing credit card charges, including service fees, from workers’ tips.

“We had support to put language in statute that would make it prohibitive to use tip workers’ tips to cover a credit card processing fee, which is something I consider the cost of doing business and not to be on the shoulder of the worker,” Fecteau said.

Federal law also allows restaurant owners to take 3 percent of a tipped worker’s wages to cover credit card fees. If the legislation passes, Maine may be the first state in the nation to prohibit that, Fecteau said.

Julie Rabinowitz, spokeswoman for the Maine Department of Labor, said in an email Friday she couldn’t speak for laws in other states, but said Maine already enforces the law as the new bill stipulates, and that Fecteau’s amendment would simply clarify existing laws. 

“Employers are prohibited from passing on the credit card fees by deducting them from tips because the fee is a cost/debt incurred by the employer based upon the employer’s choice to accept credit cards,” she wrote. “Employees have no choice in whether a customer tips by credit card or cash.”

“The provision in the bill makes this explicitly clear in the section on tips, to the benefit of both the worker and the employer. The department supports that clarification,” she said, adding the department testified in favor of restoring the tip credit.

The overall bill, which is sponsored by District 15 Sen. Roger Katz, was recommended “ought to pass” as amended in a bipartisan vote of 11 to 2, and will now go to the Senate for consideration. Democrats on the LCRED committee soundly rejected seven other Republican proposals seeking to roll back the minimum wage increase.

Wage reconciliation ensures that employers make up the gap for employees who did not make at least minimum wage when hours, base wage and tips are considered. The statute previously didn’t specify when wages had to be reconciled.

The amendment also requires employers to provide advance notice to employees impacted by the tip credit of their direct wage and the employer’s’ use of a tip pooling arrangement prior to employment.

Fecteau said an emergency measure was added to the bill, requiring only a two-thirds vote in both the Senate and House in order to pass. Once it passes both bodies, the legislation will immediately go into effect once Gov. Paul LePage’s signs off, or within 10 days of passage.

“I think both sides of the aisle recognize that we’re about to hit the summer season,” Fecteau said. ”Maine thrives on tourism and we want to make sure folks visiting on our state know tipped workers aren’t being paid $12 an hour, and that a fair tip for their service is needed.”

— Staff Writer Alan Bennett can be contacted at 282-1535, ext. 329 or [email protected]


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