Protect My Tips

SAVE OUR TIPS

Congress is considering eliminating the tip credit.

As a server you probably know that restaurants work on razor-thin profit margins—usually between 3 and 5 percent. A dramatic increase in labor costs for tipped employees forces one or more of a few bad options; either restaurants raise prices on customers (meaning less patrons), reduce staff, eliminate tipping or close the restaurant.

You can help by sending an email to Congress stating that you are a server in AZ and you want to keep your tips.

THE REALITY:

Activist groups often misleadingly point to the $9.15 base wage for tipped employees such as restaurant servers, and claim that they earn less than the minimum wage. This isn’t true: Tipped employees are guaranteed to earn at least the minimum wage and typically earn much more. Census Bureau data show that the average hourly wage for a restaurant employee earning tip income is $13.08, with top earners bringing in $24 an hour or more. If the tipped minimum wage is increased, many of these jobs and restaurants will disappear.

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Arizona Servers Want to Keep Their Tips

Read Their Stories…

Cindy – Tomasita’s Restaurant Santa Fe Server for 14 years

Mi nombre es Cindy, trabajo en Tomasita’s. Vivo aquí en Santa Fe. Y he trabajado en Tomasita’s por 14 años. Lo que mejor funciona para mí en trabajar en la industria de restaurants es la flexibilidad que tengo para ir por mi hija a la escuela, para hacer cosas que no puedo hacer si tuviera…

Brenda – Atrisco Cafe Santa Fe Server for 15 years

Mi nombre es Brenda. Trabajo en la industria del restaurant desde el 2003. Soy de México, pero radico aquí en Santa Fe. Son ya más de 15 años que trabajo con la familia Country. Empecé en el Tomasita’s y ahora estoy en el Atrisco. Por empezar, soy madre soltera, tengo dos hijos, y trabajar en…

Tiffany – Joe’s Dining Cafe Santa Fe Server for 13 years

My name’s Tiffany Garcia. I’ve been serving for about 13 years. I consider serving to be my professional career, and I am from Albuquerque, New Mexico. I’m working at Joe’s Dining in Santa Fe. I would say mostly I love meeting new people, working with people, all different type of personalities. I love the flexibility…

Jason – Tomasita’s 18 years Bar-back, Server, Bartender

“A lot of locals and a lot of tourists come here. They recognize you, they love the food, they love the service, and they love the atmosphere. Management’s great, so it’s a good place to work. The way you earn your income is by tips, you know? You’re friendly to people, you give them good…

What does elimination of the tip credit mean for tipped employees?

If the tip credit is removed, many restaurants and bars are likely to institute a service charge and eliminate tipping. Under this scenario, servers and bartenders would make an hourly wage – and likely earn considerably less than they do currently. Restaurants and bars facing major increases in labor costs will be forced to cut back employee hours and eliminate positions.

What does elimination of the tip credit mean for customers?

If the tip credit is removed, many restaurants and bars will be forced to increase menu prices and decrease staff size. Tipping helps fuel the high-quality guest service that has become a hallmark of the industry’s dining scene. Unfortunately, the changes restaurant and bar operators would be forced to make if the tip credit is eliminated will lead to a more expensive and less pleasant dining experience here in Arizona and across the Country.

What does elimination of the tip credit mean for your favorite restaurants and bars?

If the tip credit is removed, the vibrancy of Arizona’s unique dining scene will be threatened. Your favorite independently owned restaurant and bar will see a major increase in its labor costs. These are the exact businesses that will be hardest hit if the tip credit is abolished. This major labor cost increase, combined with the impacts of COVID-19, will make it harder and harder for independent restaurants and bars to succeed. Sadly, your neighborhood restaurant and bar will struggle to make it in such an environment.

GET THE FACTS

How would the elimination of the tip credit affect restaurant and bar workers?

Taking away the tip credit from restaurant and bar employees would increase tipped minimum wage to $15.

Cool. That’s a good thing, right?

Requiring that all staff earn at least minimum wage is definitely a good thing. It’s also already the law.

 

Both Federal and Arizona law require that all tipped employees make the minimum wage through a combination of their base wage plus tips, and strong protections are in place to ensure this happens. Employers must keep records documenting that employees’ earned tips plus base wage equals at least Arizona’s minimum wage. If those earnings ever fall below minimum wage the employer must “make up” the difference. The penalties for skirting this law are massive, and not a place that employers want to find themselves.

 

That said, Arizona restaurant and bar owners rarely have to “make-up” to minimum wage because, almost without exception, Arizona tipped workers make well above minimum wage—typically $17-25/hour or more. So this initiative is an attempt to solve a problem that does not exist, at least in the Arizona market.

So, what would this mean for Arizona restaurant and bar workers and owners?

This measure would dramatically change the way Arizona restaurants and bars do business. Essentially, workers who are now well-paid with strong extra earning potential would move to a system in which they receive an hourly wage), provided by their employer. Because very few restaurants and bars could afford to pay workers $15/hr PLUS tips, many would compensate by switching to a flat “service charge”—which they are not legally bound to share with employees.

 

Tipped employees will almost certainly earn less in this model. To give one example, in San Francisco, owner Thad Vogler told CNN Money that his servers were making as much as $45 an hour with tips, a figure that fell as low as $20 in a no-tipping environment.

 

Other restaurants and bars forced to comply with similar laws were forced to reduce hours, reduce staff size, increase menu prices, replace tipping with set hourly wages, and/or close their restaurant or bar. Most notably, restauranteur Danny Meyer (Gramercy Tavern, Union Square Café, Shake Shack, etc) went to a “tip included” environment in his restaurants—only to see 40 percent of his long-time front-of-house staff leave, complaining that their earnings were down significantly.

Okay, what does that mean for tips? Would people still tip?

Typically, when this type of change has been implemented in other places, restaurants and bars eliminate tipping, adding a service charge to a customer’s bill. But unlike with a tipping model, the service charge doesn’t automatically go to the server and other front-of-house staff. Restaurant and bar owners are fully entitled to claim all of the service charge money, or share only a fraction with wait staff.

What’s happened when this has been implemented elsewhere?

In 2015 in New York, a state wage board increased the base wage for all tipped workers by more than 50 percent. To adapt to the massive rise in labor costs, the state’s restaurants and bars were forced to raise prices, cut staff and shifts, or close their doors. The following year, Census Bureau data confirmed that more than 500 New York restaurant closed in the wake of this proposal—after years of restaurant growth.

What else should we know?
The current system works. In surveying tipped employees in Washington D.C. about eliminating the tip credit, owners and operators across the city, industry professionals want to preserve the tip system as it allows for a significantly higher income than an hourly wage, even if that hourly wage were to go to $15. So please send an email to Congress letting them know our industry has suffered enough during COVID-19 and can not withstand another financial blow such as eliminating tip credit!