February 26, 2015
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(Sacramento, Calif) – The California Restaurant Association announced its sponsorship Thursday of Assemblymember Daly’s AB 669, a bill that proposes to change California law to acknowledge employees’ total taxable compensation in minimum wage calculations. AB 669 will preserve the current $9 minimum wage for regularly tipped employees that earn the equivalent of $15 per hour and who are some of the most highly compensated. The January 1, 2016 increase in the minimum wage would apply to non-tipped and non-commissioned workers.
The bill is designed to limit the fiscal impact of continued minimum wage increases for highly compensated workers, while allowing employers to use limited wage dollars to benefit other non-tipped employees. The bill does state that “If, in any month, a qualifying tipped employee receives an income at a rate of less than $15 per hour, the employer shall pay the employee an amount equal to the difference.”
CRA President + CEO Jot Condie applauded the bill’s introduction and consideration of the business climate in California. “California is an increasingly challenging environment to run a successful business.” Condie continues on the risk to jobs under the current model, “The last thing California needs in the midst of a recovering economy is to cut jobs due to increased costs. California needs more jobs, not less jobs.”
The current minimum wage structure was introduced under the guise of giving raises to the “heart of the house” staff, typically cooks, prep cooks, dishwashers etc. however, these positions generally earn more than the minimum wage already, so minimum wage raises benefit already highly compensated workers. Offering an alternative wage rate for tipped workers gives restaurateurs the ability to better compensate the heart of the house workers.
“As a business owner, I strive to fairly compensate all my workers. This alternative wage rate model allows me to fairly allocate labor dollars to all my employees.” says Bruce Dean, co-founder and president of Black Bear Diner and CRA state board chairman. “The staff I have are a valuable part of my operation. I appreciate them and their hard work. The last thing I want to do is cut back on hours, or worse, jobs.”
AB 669 also addresses the current trend of restaurants moving to a service charge model, which eliminates tipping altogether. While facing unprecedented hikes in minimum wage and eroding an operator’s ability to divert those dollars to non-tipped staff, a move to a service charge model allows the operator to bring more equality within the four walls of the restaurant. 43 states currently have alternative minimum wage rates for highly compensated tipped employees.