Restaurant association officials plan to step up tip-credit provision fight

Nation's Restaurant News, Dec 8, 1997 by Alan Liddle, Robin Lee Allen

Disappointed by the National Restaurant Association's refusal to endorse legislation forcing federal tip-credit provisions on all states, trade groups in the seven states without such credits said they would try new tactics to win the coveted employer break.

With a legislative solution seemingly out of reach, state restaurant association officials said they are now looking to make inroads in their struggle for a tip credit by studying less-obvious areas of federal jurisdiction, including interstate-commerce rules and tax law. The states without tip credits are Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington.

"The seven state associations seem to have exhausted all potential remedies at home," said Gene Vosberg, executive vice president of the Washington Restaurant Association. "We believe that getting federal relief is one of our best hopes for success."

But that belief was recently struck a stunning blow. In September the NRA board voted in a closed-door session to take a neutral position on legislation known as the "Tipped Wage Parity Act." Engineered by the NRA and introduced by Rep. Frank Riggs, R-Calif., the bill proposes to apply the federal tip credit law to all tipped employees regardless of state law.

Congress froze the federal tip credit at $2.13 an hour last year as it raised the minimum wage, conceding that tipped employees generally earn more than the minimum wage.

Recognizing the political uproar that would ensue if the cash wagcs of tipped workers in states without tip credits were suddenly reduced to the current federal cash wage of $2.13, the Riggs bill calls for freezing the cash wage paid to such workers at the level being paid when the bill is enacted. That means that employers in states forced to offer a tip credit by the Riggs bill won't benefit from the legislation unless the minimum wage rises again.

"At that board meeting many of our member states expressed concern about the viability of pushing that [Riggs] bill," said Herman Cain, the NRA's chief executive. "Most states have a tip credit because they have achieved it through state legislation. If we try to push the Riggs bill, which would provide a federal pre-emption, that could get out of control and other states with a tip credit might be in jeopardy."

Members of the Ohio Restaurant Association were among the first to push the emotional issue to a head. Before the NRA's meeting the Ohio association's board passed a resolution to ask the NRA to remain neutral on the Riggs bill. Ohio permits employers to pay the $2.13-an-hour minimum cash wage spelled out by the federal tip credit.

"We just feel it's a states' rights issue," said Charles J. Blosser, ORA president. "The NRA had one of its greatest victories when [Congress] froze the cash wage, and we just think you should not go back and address that issue in a single piece of legislation because it could come back to haunt us."

California Restaurant Association senior director of government affairs D. Kendall Edwards acknowled edged that he was "surprised" that the Riggs bill "became an `us-vs.-them' sort of thing." "We thought of this as an industry issue and, as such, something that the NRA should be involved in," she said.

Edwards pointed out that some restaurant association officials from states with tip credits agreed with Riggs-bill supporters that all credits are at risk as long as states and local governments are not bound by a federal guideline/ Among them, she said, were representatives of the Illinois and Texas associations.

Despite arguments that the Riggs bill could protect all tip credits by cementing them in federal law, the seven creditless states were left without the official support of the NRA in their fight for the legislation, which is now languishing in the House.

"With that vote we lost the NRA's influence, and that was a pretty big hit for us," Washigton's Vosberg remarked. "If you're out there trying to sell the bill and various congressmen say, `Where's the NRA stand on this?' and you say, `It's taken a neutral position,' they'll say, `If the NRA isn't for it, what are we doing considering it?'"

Nevertheless, the seven states have not lost all hope. And many are gearing up for more battles on their own turfs.

"Because the NRA has a neutral stance on the Riggs bill doesn't mean we're without alternatives," commented Tom Day, government affairs manager for the Minnesota Restaurant Association. Day currently is working with the NRA to achieve a tip credit through heretofore-untried channels.

"We need to sit down with consultants and attorneys and hammer something out," he said.

Day believes the Riggs bill, even with NRA support, would need to surmount big obstacles to become law. He said, "Any bill that says flat out that the federal government is going to cramp states' rights has a lot of problems upfront."

Edwards of the California Restaurant Association reported that her group, too, would work closely with NRA staff to find a solution "the entire [NRA] membership can get behind." She said the team would "look at all the options" for helping operators in states without tip credits, whether that means winning a tax break or some other financial relief."