Seeking relief from recent increases in the minimum wage, Malibu restaurateurs met with Assembly Speaker Pro Tem Sheila Kuehl (D-Santa Monica) last week to lobby for a change in state law that would allow employers to use a portion of an employee’s tips to meet the minimum wage requirement.
California is one of only seven states that does not permit employers to pay tipped employees less than the minimum wage, and then to claim a portion of an employees’ tips to make up the difference. Federal law permits employers in states that have a “tip credit” to pay tipped employees half the minimum wage, as long as an employee’s tips will bring up the pay to the hourly wage requirement.
The California Restaurant Association has been fighting for years to restore the tip credit, which was eliminated in the 1970s under then-Gov. Jerry Brown. But the association has stepped up its efforts recently after four minimum-wage increases in the past two years has brought California’s minimum wage to $5.75 an hour. The association is encouraging its members to lobby their legislators for a tip credit.
But Kuehl told the restaurant owners and managers, who gathered at Geoffrey’s Friday to press their case, that she did not support a restoration of the credit.
“The employer-employee relationship should be a win-win for both,” said Kuehl. “I haven’t seen any way that a tip credit is a win-win.”
She also expressed doubts that a majority of legislators would support such a change either.
“I don’t believe very honestly that that will change any time soon,” she said.
Nonetheless, Kuehl said, if restaurant owners could present convincing arguments that the lack of a tip credit was detrimental to their businesses, some movement on the issue may be possible.
“When the stage is set with a minimum-wage employee versus a very successful business, it’s very difficult to make your case,” she said. “If you want me to be your advocate, then you need to give me the ammo.”
Jeff Peterson, who organized the meeting at Geoffrey’s, where he is general manager, said the restaurant has paid more than $50,000 in wage increases in the past year because of changes in the minimum wage laws, and, he said, his restaurant has a very slim profit margin to show for it.
“I don’t have the money [for the wage increases],” said Peterson, who is also the president of the Malibu Chamber of Commerce. “I’ve raised the salmon money. I’ve raised the price of beverages.”
Undaunted by Kuehl’s lack of enthusiasm for restoring the tip credit, Peterson told the Malibu restaurant owners, including the proprietors of BeauRivage, Marmalade and Moonshadows, that he wanted to form a committee to push for a change in the law.
“We have to do something,” he said. “Because if Gray Davis comes into power, you can bet that the minimum wage will go up to $6.50 or $6.75.”