AUGUSTA — Restaurant owners and workers will converge Wednesday on the State House as lawmakers begin debating whether to roll back a controversial portion of last November’s minimum wage referendum affecting tipped workers.

The phase-out of the so-called “tip credit” given to employers, which was part of Maine voters’ decision to raise the minimum wage, has divided the state’s economically vital restaurant industry and is putting pressure on some lawmakers in towns with vibrant food scenes.

Although supporters of the ballot initiative maintain that eliminating the tip credit will lead to higher, more consistent pay for restaurant workers, servers say some in their industry already are seeing tips decline because customers incorrectly assume they received a large jump in their hourly pay.

“I would simply encourage legislators to listen to those people who are most affected by this and who have been most affected by Question 4 not clearly explaining that the tip credit will be eliminated,” said Joshua Richardson, a server in two Portland restaurants who wants to see the tip credit restored.

For decades, restaurant owners in Maine and many other states have been allowed to pay tipped workers less than the minimum wage as long as tips cover the difference. In Maine, employers could pay tipped workers 50 percent of the existing minimum wage. Question 4 raised the statewide minimum wage from $7.50 an hour to $9 beginning Jan. 1, followed by annual increases until the hourly wage reaches $12 in 2020. The minimum wage for tipped restaurant workers rose from $3.75 to $5 an hour Jan. 1 and will rise $1 each year through 2024. But the ballot measure – which passed with 55 percent of the vote – also gradually eliminates the tip credit annually through 2024, when employers will be paying $12 an hour, the full minimum wage.

The tip credit portion of the ballot initiative was arguably the most contentious aspect before the election, and after.

On Wednesday, the Legislature’s Labor, Commerce, Research and Economic Development Committee will hold public hearings on two bills – L.D. 673 and L.D. 702 – that would retain the tip credit in Maine, and a third bill creating a commission to study the issue. In the afternoon, the committee also will hear testimony on bills to make other changes to the new minimum wage law, although those dealing with the tip credit have better odds of passage.

Both sides are gearing up for a showdown.

“We are asking people to turn out for all of the minimum wage bills,” said Mike Tipping, communications director for the Maine People’s Alliance, the liberal organization that helped spearhead the minimum wage ballot initiative. “It’s obviously something that received tremendous support – more than any other initiative in state history.”

The future of the tip credit likely hinges on Democrats, who have made increasing the minimum wage a part of their platform for years.

The Maine People’s Alliance, the Maine AFL-CIO and other groups behind Question 4 are heavily lobbying Democrats to leave the results of the November ballot initiative intact, and that includes allowing the tip credit to fade away. They are also targeting Democrats who support reinstating the tip credit. A Feb. 28 article in The Beacon, an online publication of the Maine People’s Alliance, called out the eight Democrats who signed on as co-sponsors, accusing them of “breaking with their party to co-sponsor legislation to roll back part of the minimum wage increase just passed by statewide referendum.”

Among them was Rep. Martin Grohman, D-Biddeford, whose district was leafleted with fliers critical of Grohman’s co-sponsorship of one of the bills. Grohman said he has heard from restaurant owners and workers in his district, many of whom support restoring the tip credit.

“The food sector is one sector in Maine’s economy that is doing well, and I am loath to cause problems for it,” Grohman said. While he said sides in the debate have the same goal – namely, to lift the wages of all workers – the evidence he has seen suggests the current system allows tipped employees to make more money.

Maine’s hospitality industry, which includes restaurants and hotels, brought in more than $3.6 billion in revenue last year, a record.

A grassroots group called Restaurant Workers of Maine says more than 4,800 workers in the state support reinstating the tip credit. Richardson, the Portland server, said he has not noticed a difference in his tips to date, but he said colleagues elsewhere – especially outside the Portland area – are seeing a decline.

“And I have fortunately had people inquire, ‘Are you getting $9 an hour or $12 an hour now?’ ” Richardson said. “So there is significant confusion in the public.”

Republican Gov. Paul LePage – an outspoken critic of Question 4 – has predicted that the gradual elimination of the tip credit will have dire consequences for the restaurant industry. He has said he is waging his own personal campaign to pressure lawmakers by cutting in half the tips he leaves and then leaving notes for the servers urging them to contact their local legislators.

In response, The Beacon published a piece under the headline “Gov. LePage has been stiffing servers while he works to cut their wages.”

On Wednesday, lawmakers will likely hear from Wendyll Caisse, owner of Buck’s Naked BBQ in Freeport and Windham.

Caisse estimates that she will have to increase her prices 4 percent annually through 2024 in order to cover the costs of paying all of her employees – including tipped employees – the full minimum wage. She said she is “completely comfortable” with a minimum wage increase, but she questioned whether anyone will be willing to pay more than $23 for a pulled pork sandwich. Eliminating the tip credit, Caisse said, will effectively price her and many other restaurant owners out of the market because they will be unable to remain profitable.

She accuses the Maine People’s Alliance and labor unions of trying to eliminate the tip credit in order to gain leverage with workers who now earn much of their salaries in tips.

“It’s coming from outside of our industry,” Caisse said. “We were not asked about this prior to this referendum.”

But Caisse and other supporters of the tip credit may have a tough sell with many Democrats who are reluctant to meddle with a minimum wage initiative supported by the vast majority of their party’s base.

Sen. Ben Chipman, D-Portland, is among those who is leaning toward not making major changes to the minimum wage law or any of the other ballot initiatives passed by voters last November.

Chipman, whose district includes much of the Portland peninsula, said he makes a point of asking servers about the tip credit whenever he eats out, and he also has been contacted by workers.

“They have mixed feelings, for sure, about what we ought to do, but all of the people I’ve talked to said they have not noticed a major drop-off in tips,” he said.

Kevin Miller can be contacted at 791-6312 or at:

[email protected]

Twitter: KevinMillerPPH

Augusta and Waterville news

Get news and events from your towns in your inbox every Friday.


  • This field is for validation purposes and should be left unchanged.