Associations urge Senate to retain wage provisions

Nation's Restaurant News, June 24, 1996 by Alan Liddle

WASHINGTON -- Encouraged by the House of Representatives' passage of a minimum-wage freeze for tipped workers and a subminimum starting wage for young people, the National Restaurant Association and state restaurant groups are urging senators to back similar, industry-friendly provisions or, better yet, scuttle a proposed minimum-wage hike outright.

Representatives from the NRA and as many as 14 state associations were to have gathered in Washington June 18-20 to meet with "targeted" House and Senate Republicans, said organizers of the "fly-in." Officials from some of the associations indicated that their quest might benefit from the recent rise to power of conservative Republican Sen. Trent Lott of Mississippi, the successor to Bob Dole as majority leader.

"We want to try to get across the whole message to these lawmakers," California Restaurant Association executive vice president Stanley Kyker said of the association-mounted lobbying campaign. "We don't what to see an increase in the minimum wage at all, but if there is one, we need to make sure the final version includes the provisions of the Goodling amendment."

The so-called Goodling amendment was part of the House minimum-wage bill approved May 22, and its provisions would permit employers to freeze at current levels the minimum wage paid to tipped workers and to pay new hires ages 19 and younger a starting wage of $4.25 an hour for the first 90 days. The amendment gets its name from Republican Rep. William F. Goodling of Pennsylvania, the lawmaker who put it forward at the behest of the NRA and associations from states that do not now have tip credits.

While the Goodling amendment gave industry trade groups much of what they wanted, it stopped short of providing what many restaurateurs desire: a federal tip-credit law that pre-empts state law and a training, or "opportunity," wage applicable to all new hires, regardless of age.

As the federal law now stands, it permits states to grant tip credits. However, legislators and in some cases voters in seven states -- Alaska, California, Montana, Minnesota, Nevada, Oregon and Washington -- have refused to provide employers with such tip credits.

If the federal minimum wage is increased, a freeze on the minimum wage now paid to workers receiving gratuities effectively would grant a tip credit to operators in states that do not offer employers such a break. But apart from aiding restaurateurs and other employers in the seven states without tip credits, a freeze would aid operators nation-wide because current federal law requires employers to pay employees a so-called cash wage of at least half of the current minimum, regardless of tip income.

Today the federally required hourly cash wage is $2.13, or half of the federal minimum wage of $4.25 an hour. Consequently, if a wage freeze for employees receiving gratuities is passed into law along with an increase in the minimum wage, operators in states with tip credits could, at their option, continue to pay tipped workers $2.13 an hour even though that amount is less than half of the new mandated base rate.

A countrywide freeze on the minimum wage paid to tipped workers "would bring relief to the employers of an estimated 63 percent of the minimum-wage earners across the nation," said Tom Day, director of government affairs for the Minnesota Restaurant Association. "The financial ramifications of this are huge."

In lobbying Congress, Day said, "The most important thing is to win federal preemption on the tip credit."

Washington Restaurant Association executive vice president Gene Vosberg agreed with Day. "If we can't stop a minimum-wage increase, there has got to be some relief included in the law for full-service operators," he declared. "A majority of their employees are paid minimum wage but get tips and end up with the highest compensation."

Lee Culpepper, senior legislative representative for the NRA, said his group has "pushed" for a freeze on the federal cash wage paid to tipped employees. He said "it was the state associations that suggested pre-emption language" that would force states to comply with federal law.

NRA lobbyists for some time have advocated a training wage and were happy to see one survive in the House minimum-wage bill, Culpepper explained. However, he added, "we had hoped they would make it available for employers to use for all their employees, regardless of age."

The House on May 22 approved a 90-cent increase in the federal minimum wage, with the base rate scheduled to move from $4.25 an hour to $4.75 next month and up to $5.15 in July 1997. As association executives and members trekked to Capitol Hill, it was unclear whether the Senate would build on the House bill or craft its own, with the differences to be worked out later in a joint-chamber conference committee.

Dole's departure from the Senate and Lott's selection as majority leader give some minimum-wage opponents cause for optimism. One suggested that because no presidential candidate can risk the appearance of siding against the working class in an election year, "under Dole, a minimum-wage bill would have been a sure thing."