WASHINGTON — Tip money earned by bartenders in Seattle, waitresses in Las Vegas and manicurists in Hollywood is on the table in the nation's capital as lawmakers scrap over an election-year minimum-wage bill.
Washington, Nevada and California are among seven states where workers get to keep their tips on top of getting paid their state's full minimum wage. In other states, tip-earning workers get paid less than the minimum wage and make up the difference with tips.
A provision in GOP-written minimum-wage legislation passed by the House and under consideration this week in the Senate could change the law in those seven states. (The others are Montana, Alaska, Minnesota and Oregon.) It would deal a pay cut of $3 or more an hour to thousands of waiters, bellhops and hairdressers in those states, according to Democrats and labor groups.
"Everything that has been achieved in seven states to support low-wage workers who earn tips is destroyed by this bill," said Sen. Dianne Feinstein, D-Calif. "This bill would slash the salaries of thousands of workers."
Republicans and the National Restaurant Association, which opposes a minimum-wage increase and fought for the tip provision, dispute the Democratic interpretation. They say the legislation is intended to have an impact only when the states in question increase their minimum wage — at which point the increase would come out of a worker's tips, not an employer's payroll.
"No provision results in the lowering of wages for any worker. The purpose of the provision is to allow employers with tipped employees to count their employees' tips as wages for purposes of meeting their minimum-wage obligation," said Brendan Flanagan, a spokesman for the restaurant trade group.
But a memo by the nonpartisan Congressional Research Service on Wednesday backed up the Democrats' position. Under the bill's language, the seven affected states "would seem to be prohibited from enforcing the minimum-wage rate provisions of their laws with respect to a tipped employee," the memo said.
In a letter to Senate Majority Leader Bill Frist, R-Tenn., a Labor Department official said the department would interpret the bill's language as protecting current wages for tipped employees in the seven states. Victoria Lipnic, assistant secretary of labor for employment standards, offered in the letter to work with lawmakers to clarify the intent of the legislation — something that several Republican senators, including Norm Coleman of Minnesota, said Wednesday they intended to do.
The minimum-wage legislation already was controversial because House Republican leaders passed it as part of a bill cutting inheritance taxes on multimillion-dollar estates, a top GOP priority opposed by most Democrats. The tipped-workers' provision looked likely to heighten Democratic opposition and could factor into decision-making by lawmakers who haven't made their position known, including Democratic Sens. Maria Cantwell and Patty Murray of Washington state.
Frist has said he wants a vote Friday on the measure, which he has called a "fair compromise" that gives tax relief to thousands while boosting wages for the poorest workers.
The GOP package would increase the federal minimum wage from $5.15 to $7.25 per hour, phased in over the next three years. States with higher state minimum wages — in California it's $6.75 an hour; in Washington it's $7.63 — would keep their higher levels, at least until the federal level exceeds it.
Except for in the seven states at issue, employers of tipped workers now pay only a portion of the minimum wage — starting at $2.13 an hour — as long as the employees draw enough tips to make up the rest. A tipped employee is defined as one who regularly receives more than $30 per month in tips.
Under the legislation, according to Democrats, that same system would go into effect in the seven states where employers now pay the full wage. So instead of getting to keep tips on top of their minimum wage in Washington, California and the other states, tipped workers would be paid a base wage of $2.13 an hour and employers could use their tips to make up the rest.
In Seattle on Wednesday afternoon, Melody Swett, a server at the Westin Hotel, was among 100 members of various labor groups rallying against the bill in front of the Executive Inn, a couple of blocks from the Space Needle.
Swett, 56, has been working at the Westin for 31 years. Last year, she said, she earned about $35,000 in wages and tips. She said that when tourists are in town during the summer she could earn $100 or, occasionally, $200 a night in tips. In the winter months, she said, tips could drop to $5, $10 or $20 a night. The bartenders and runners bringing food get a 20 percent share of the tip money.
"If they get this bill passed, it'll cut my wages per month by over $900," she said. "Can you see the problem in that?"
Democratic Reps. Jay Inslee and Jim McDermott attended the rally.
Another waitress at the rally was Peggy Whitlock, 48, who has worked for six years at the Everett Elks Club. She estimated her annual income, with tips and wages, at $25,000. She said the proposed bill would cut that income by $10,000.
She's married and her children are grown. Whitlock wondered about waitresses she knows who are single mothers with young children.
"They'll have to make choices — pay the rent, or the electricity, or the phone," she said. "They might as well go on welfare. Then they'll at least have the medical paid for their children. And it'll be the taxpayers picking that up."
Seattle Times staff reporter Erik Lacitis contributed to this report.
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