Livable Wage Legislation .style1{font-size: small}.style2 {font-size: x-small}-->  Mission Members Action Alerts Calendar Facts & FAQ Legislation FederalMinimum Wage Job Gap Study & Related Studies Education BurlingtonLW Campaign Wal-Martin VT Victories Get Involved Livable Wage Links Buttons & Stickers RelatedArticles Contact Us  "Politics isnot about power. Politics is not about money. Politics is not aboutwinning for the sake of winning. Politics is about the improvement ofpeople's lives. It's about advancing the cause of peace and the justicein our country and in our world. Politics is about doing well forpeople." -Senator Paul Wellstone (1944-2002) TheVermont Livable Wage Campaign will finalize its 2008 legislativepriorities in late January at the steering committee meeting. TIPPED WORKERS RECEIVE A RAISE! BILL PASSES MAY 2007 VLWC Legislative Priorities 2007 Priority #1: Eliminate the Tipped Minimum Wage. Click here for talking pointsontipped minimum wage Click here forinformation on the raise! Click hereto read the Senate voting record Priority #2: Mandatory Sick Day Priority #3: Increase the FederalMinimum Wage VLWC Economic Justice State LegislativeVoting Record 2005-2006 VLWC Legislative History MinimumWageIncrease History (2000-2006)Legislative Summer Study Report on Livable Income (1999) How tokeep track of Vermont Legislative Activity Howtocontact your Representative or Senator VLWCLegislative Priorities 2007 The VLWCsteering committee approved the following priorities for the 2007legislative session in early January 2007. We always welcome yourfeedback on our legislative work and your involvement in lobbying ourstate representatives and senators to support our economic justiceinitiatives. PRIORITY #1: Increasethe Tipped Minimum Wage Weadvocate for the tipped minimum wage to increase by $1.00 every yearuntil it becomes the same rate as the non-tipped minimum wage.Currently the tipped minimum wage base rate is $3.65/hour. It willlikely meet the non-tipped minimum wage rate in four years. Thispolicy change will eliminate the tipped workerminimum wage so Vermont has one minimum wage rate like seven otherstates (AK, CA, MN, MT, NV, OR, and WA). Wealso call for a redefinition of tipped workers in Vermont. A tippedworker is currently defined as any worker who regularly earns"$30 ormore in tips per month." We suggest revising the definition to "$200 ormore in tips a month." This policy change will make sure workers whoreceive a small amount of tips are paid a higher minimum wage becausetips do not provide a large source of income. Between 2000and 2007 the general minimum wage increased from $5.27 to $7.53 ($2.26)vs. the tipped minimum wage increased from $3.16 to $3.65 (49cents). Eliminatingthe tipped employee minimum wage or redefining who is atipped worker would subject all employers to one minimum wage rate.Currently, employers who have tipped workers are exempted from payingthe higher minimum wage. Allowing a tipped credit means the publicsubsidizes wages of tipped workers for certain industries (restaurant,tourism). TIPPEDWORKERS RECEIVE A RAISE! BILL PASSES IN MAY 2007! On Wednesday May 9th,the Vermont House of Representatives approved S. 27, a bill to increasethe minimum wage for tipped workers in Vermont. Currently the tippedminimum wage is $3.65/hour. A worker is considered a “tippedworker” and can be paid the $3.65/hour if he/she earns $30 ormore a month in tips on a regular basis. About 3,500 workers areconsidered tipped workers in Vermont. Occupations range from waitstaffto housekeepers in hotels/motels to bell-hops to pizza delivery people.The bill now moves directly to the Governor since the Senate passed theexact language of S. 27 in March. The Governor is expected to sign thebill. S.27, increases the tipped minimum wage annually based on the CPI-U(Consumer Price Index – Urban or“cost-of-living”) starting on Jan 1, 2008. ThisCOLA (cost of living adjustment) is the same index that is currentlyattached to the general minimum wage. S. 27 also includes a revision to the tipped worker definition.Currently workers who make $30 or more in tips a month can be paid as atipped worker. S. 27 revises this definition to $120 or more in tips amonth. The current definition had not been adjusted since1957. Redefining the tip threshold excludes low-tipped and somepart-time tipped workers who earn small tips due to low priced menusfrom being paid the tipped minimum wage. Instead, these workers willnow be entitled to the general minimum wage ($7.53/hr in 2007). Prior to the passage of S. 27, the Vermont tipped minimum wage had notmoved in Vermont for three years. It was last increased on Jan 1, 2005.An annual COLA insures that tipped workers do not loose ground in thevalue of their wages as the cost of living increases. Waitstaffcomprise the majority of tipped workers in Vermont. Menu prices, thebase for most tip calculations, usually do not annually adjust andthus, tips do not automatically adjust to reflect the growing cost ofliving. Tippedworkers are legally guaranteed the general minimum wage ($7.53) via the“tipped credit.” Currently, Vermont law requires anemployer to fill in the gap when an employee makes less than thegeneral minimum wage when tips and $3.65 per hour work do not equal$7.53/hour. As tipped workers testified in front of the House GeneralCommittee in February, many employees do not know the “tippedcredit” provision is Vermont law. “Mostpeople would agree that you cannot meet your basic needs on minimumwage in Vermont,” said Emma Mulvaney-Stanak, Director of theVermont Livable Wage Campaign at the Peace & Justice Center.“We need jobs that move people towards a livable wage. Even afull time minimum wage job ($7.53/hr, 40 hr a week) puts a family ofthree below the official poverty line ($17,000) (2007 figure).Increasing the tipped minimum wage will help workers in our serviceeconomy.” Some employers are also unaware of tipped minimum wage laws. Forexample “tip pooling” is illegal. Pooling is thepractice of collecting all tips earned by waitstaff at an establishmentper night and dividing wages among all waitstaff equally at the end ofthe night. By law, waitstaff should not be required to share his/hertips in any manner. Rebecca White, a tipped worker at a Church St. restaurant inBurlington, testified that the common practice at her establishment wasto “tip out” non-tipped workers at the end of thenight for helping to bus tables, mix drinks or seat patrons. Under theVermont tip rules, such “tip sharing” practicescannot be required by the employer. KimberlyEad, a former tipped worker in Burlington and in resorts at the Mt.Snow area made the following testimony in front of the House Committee,“Some nights my tips and tipped minimum wage did not evencover the cost of my gas to drive to work. I am lucky. Idon’t have children to support. Most tipped workers are notmaking large amounts of money and are often hit hard by bad weather,slow tourist seasons, and low tips by foreign tourists unfamiliar withour tipping system. It is extremely difficult to budget yourtips—the main source of income because the tipped minimumwage is so low—to stretch to cover all your basic needsthrough the slow periods since tips fluctuate all year.” “Thelegal guarantee that tipped workers will always receive the generalminimum wage does not always happen,” said Megan Harlow, acollege student who has worked in two restaurants in southern Vermont.“Not all employers or even employees know the law and someemployers try to avoid paying more in wages. There were several payperiods when I never received a tipped credit in my paycheck eventhough my tips caused my total wage to fall below the general minimumwage. Until I heard about this bill in the Statehouse, I had no idea Iwas entitled to the minimum wage when my tips are low.” “Livablewage is a matter of human dignity and basic respect for our neighbors,co-workers and fellow Vermonters no matter what your occupation happensto be,” said Mulvaney-Stanak. “Vermont’seconomy relies heavily on our service industry. Tipped workers deservea long overdue raise.” Read the Voting RecordThank those Senators who did the right thing for working people and askSenators who voted against a real raise for tipped workers, WHY! The House of Representatives approved the bill by voice vote. No votingrecord is available on this issue for representatives. TheMiller Amendment postpone any increase to the tipped minimum wage untilJan 1, 2009 and such an increase would be based on the cost of livingadjustment (CPI-U). The amendment failed. The Condos, Campbell andMiller amendment removed a 14 cent increase to the tipped minimum wageeffective immediately if the bill passed the Legislature and postponedan increase to the tipped minimum wage until Jan 1, 2008. Bothamendments preserved the redefinition of the threshold for who can bepaid the tipped worker minimum wage based on amount of tips collectedin a month. Senator County Miller Amdt* Condos,Campbell, Miller Amdt* Final AmendedS. 27* VLWC Vote N N Ayer (D) Addison N Y Y Giard (D) Addison N N Y Hartwell (D) Bennington N N Y Sears (D) Bennington N Y Y Coppenrath (R) Caledonia N Y N Kitchel (D) Caledonia N Y Y Condos (D) Chittenden A A A Flanagan (D) Chittenden N Y Y Lyons (D) Chittenden N Y Y Miller (D) Chittenden Y Y Y Racine (D) Chittenden N Y Y Snelling (R) Chittenden Y Y Y Illuzzi (R) Essex-Orleans Y Y Y Starr (D) Essex-Orleans N Y Y Collins (D) Franklin N Y Y Kittell (D) Franklin N Y Y Mazza (D) Grand Isle Y N N Bartlett (D) Lamoille N Y Y MacDonald (D) Orange A Y Y Carris (D) Rutland Y Y Y Maynard (R) Rutland Y A A Mullin (R) Rutland Y Y N Cummings (D) Washington N Y Y Doyle (R) Washington A Y Y Scott (R) Washington N Y N Shumlin (D) Windham N Y Y White (D) Windham N Y Y Campbell (D) Windsor Y Y Y McCormack (D) Windsor N N Y Nitka (D) Windsor A Y Y Results Yeas 8, Nays 18 Yeas 24 to Nays 4 Yeas 24 to Nays 4 Tipped minimum wagetalking points PRIORITY #2: Support Vermont Commission onWomen with Mandatory Sick Day Legislation VLWCsupports the Vermont Commission on Women's work to pass abill to require all employers to provide each employee who works 30 ormore hours a week five paid sick days. Fewer than 30 hours per weekwith a pro-rated number of sick days. CURRENTSTATUS: Check back soon! The bill is currentlybeing drafted. A bill number will be available soon! PRIORITY#3: Increase theFederal Minimum Wage CURRENT STATUS: On Thursday February 1st, 2007 the US senate passed a bill to boost the federal minimumwage by $2.10 an hour over the next two years, bringing the federalminimum wage to $7.25 an hour by 2009. The bill contained amendmentswith controversial tax cuts for small businesses. Theincrease in the minimum wage is the first in a decade. It wasapproved by a 94-3 vote, finishing a nine day debate on the senatefloor. The bill will now be reconciled with the House versionthat contained no tax provisions passed on January 10, 2007. Check back for more details as the Congress moves to compromise on thefinal version of the bill. Click here for more information and to takeaction! Howto keep track of Vermont Legislative Activity: Go to the VermontLegislative Home Page From there youcan:- Monitor committee and bill activity- Download copies of bills- Browse theLegislativeDirectory and find emails, phone numbers andcontact information for your Senators or Representatives! 2007 TippedMinimum Wage FAQ Didwe not just raise the minimum wage in Vermont? Have we not done enough?The VT Legislature adjusted the minimum wage in June 2005 which enactedone step increase from $7.00/hour to $7.25/hour on January 1, 2006 andthen an annual cost-of-living adjustment increase based on the rate ofinflation (CPI-U) on January 1, 2007. The minimum wageincreased to $7.53/hour on Jan.1, 2007. While the Legislature has donemuch to raise the minimum wage over the past 10 years (25 cents in1996, 40 cents in 1997, 10 cents in 1998, 50 cent increases in 1999 and2000, 50 cents in 2004, 25 cents in 2005, 25 cents in 2006, and 28cents in 2007), there was little, if any, gain in the 1980s and early1990s. Thus, in real dollars, those at the bottom of the wagescale have lost ground since 1969 ?? a time when a four-personhousehold with one wage earner making the minimumwage could still meet their family's basic needs. Whatis the tipped minimum wage?Vermont has twodifferent minimum wage rates??the general minimum wage ($7.53/hour in2007) and the tipped worker minimum wage ($3.65/hour in 2007). A tippedemployee is any employee who "customarily and regularly" receives morethan $30 per month in tips. This definition is the minimum leveldefinition for tipped workers. The tipped minimum wage rate did notincrease on January 1, 2007. If the tipped minimum wageincreased at the same rate as the general minimum wage since 1990 itwould be $4.53 today. Whatcounts as a "tip"? A "tip" is a voluntary payment determined by a customer. The amount ofthe tip cannot be dictated by the employer. For example, the 15%gratuity a restaurant may require for large parties for service is nota "tip." Whatis a tip credit?A tip credit allows employers to count tips as wages for purposes ofminimum wage requirements and thus pay a lower cash wage rate($3.65/hour) to the tipped worker. The maximum tip credit amount inVermont is $3.88 per hour or in other words the difference between$7.53 (general min. wage rate per hour) and $3.65 (tipped employee min.wage rate per hour). At all times, an employee's total hourly wage mustequal at least the general minimum wage ($7.53/hour) (base wage plustips). If an employee's tips and base wage do not equal $7.53 for thehours worked in a week, the employer must pay the difference. When was the definition of "tipped employee" last updated?The current definition of a "tipped employee" first appeared in Vermontstatute in 2003 [Public Act No. 67 Sec 25a]. On the federal level, thetipped employee definition of monthly tips was revised from $20.00 to$30.00 in 1977. Essentially, tipped workers have had the samedefinition since the 1977 federal revision. Aren't tipped employees guaranteed at least $7.53/hour for every hourthey work if they do not bring in enough tips every week? So why do weneed to raise the tipped minimum wage rate?Yes, tipped employees must receive a sum of tips and a base wage equalto the Vermont minimum wage at all times. If an employee does notreceive enough tips per week to at least meet the $7.53 per hour rate,then the employer must pay more in wages in order to meet the $7.53 perhour rate. With two different minimum wage rates, employers who employnon-tipped employees are subject to the higher minimum wage rate whileemployers of tipped workers (primarily restaurants) are allowed to paya much lower rate. Employers of tipped workers can pay a lower minimumwage rate while legally crediting tips from the public to pay the restof the wage. Essentially, the public subsidizes the wages of tippedworkers. Tips are unpredictable during certain parts of the year (ex:slow business in winter). Also customers are not bound by law to leavea minimum tip, which creates a precarious situation for workers. Tps donot automatically increase as the cost of living increases. It is therole of the employer to provide workers with at least a cost of livingincrease through the base wage. We must strive to support livable wagejobs in Vermont, not jobs thatguarantee only a minimum wage. Don'tmost tipped employees make well above the minimum wage with so manytips?Including tips in the calculation of tipped employees' earnings usuallydoes mean that they make above the minimum wage. While mosttipped employees make above the minimum wage, most are NOT employed inexpensive restaurants in Vermont. In smallerestablishments, tipped employees often spend some hours doing"non-tipped" work: set-up, cleaning, restocking, break-down. Most tipped workers do not have employer-providedhealth insurance, dental insurance or a retirement plan. As a result,these workers often have to pay for these basic needs out of pocketwhich can be a significant expense. Service jobs cannot be exported toanother state or country. These are jobs that will stay inVermont and are one of the occupations that are projected to add agreat number of jobs in the future. A high-road economicstrategy means making the jobs we have livable jobs. Doesn'tpaying servers more means paying "back of the house" less (i.e. cooksand kitchen staff)? Requiring allemployers to pay the minimum wage is part of a high-wage strategy. Ifthe workers in the "back of the house" are already being paid minimumwage, employers cannot legally lower wages below the general minimumwage rate. Moreover, if we increased the tipped minimum wage at samerate as the general minimum wage since 1990 it would be $4.53/hourtoday (an additional $28 a week for a full time server (avg 32 hrs aweek)). Ultimately, employers should strive to pay livable wages to allworkers in the front and back of the house. Howmany Vermonters earn the tipped minimum wage?According to the Vermont Department of Labor, there are an estimated4,000 tipped employees in Vermont. Most tippedemployees are employed in the leisure and hospitality fields which is alarge occupational field in Vermont. Tipped employees are predominatelyemployees in hotels, motels,tourist places, and restaurants who customarily and regularly receivetips for direct and personal customer service. Whatis the federal tipped minimum wage?The federal tipped minimum wage rate has remained at $2.13 per hoursince 1997. The federal definition of a tippedemployee is any employee engaged in an occupation in which he or shecustomarily and regularly receives more than $30 a month in tips. Doall states have tipped minimum wage? No. Seven states do not allow the use of tip credit under their stateminimum wage laws. These states include Alaska, California,Minnesota, Montana, Nevada, Oregon and Washington. The minimum cashwage for tipped employees is the same as the state's general minimumwage rate. The states have the following minimum wage rates as ofJanuary 2007: AK ($7.15), CA ($7.50), MN (large employers<$500K--$6.15, small employers >$500K--$5.25), MT($6.15), NV ($6.15), OR ($7.80), WA ($7.93). Aren'tmost tipped minimum wage jobs mostly held by teenagers? Since there are only 4,000 tipped minimum wage workers in Vermont it isdifficult to find exact data on such a small group of workers. However,data on the general minimum wage workforce contain similar trends fortipped minimum wage workers. According to 1999-2001 Current PopulationSurvey (CPS) data, 60% of all workers earning less than$8.00/hour are over 30 years old. Will raisingthe tipped minimum wage hurt small businesses in the hospitalityindustry operating with such small profit margins? Maybe some would notbe able to remain competitive.Increasing the tipped minimum wage in Vermont would equalthe playing field for all businesses because all businesses will facethe same cost increases instead of allowing no annual increase to thebase rate for tipped minimum wage employers. The 1999 Act 21 SummerLegislative Study on Livable Income found that the minimum wage ($5.75at the time) could be increased to $7.00 /hour in the year 2000 withoutnegatively impacting the overall Vermont economy (see REMImodel analysis ?? Issue #3). These findingsincluded the impact on small businesses and accounted for a generalminimum wage increase which affects approximately 18,000 workers. Inthe case of tipped workers, an increase would impact approximately4,000 tipped workers. Willincreasingthe minimum wage lead to inflation? There is no good evidence one way or the other that increasing theminimum wage will lead to increased inflation. There are examples overthe last thirty years (specifically OR and WA) when wage hikes did notspur inflation and other times when inflation occurred with no wagehikes. The bottom line is that inflation has been constantlyon the rise, whether workers received a wage increase or not. Since thelast time the minimum wage was raised nationally in 1997, the economyhas created millions of new jobs and inflation has fallen to its lowestlevel in a generation. Whatdo other states have as a tipped minimum wage?The federal tipped minimum wage base rate currently set at $2.13 /hr.with a tip credit of $3.12/hr. Both figures have not been increasedsince 1997. In response to lack of U.S. Congressional actionon the minimum wage, 7 states have only one minimum wage rate for allemployees (tipped and non-tipped). An additional 8 states have highertipped minimum wage rates than Vermont.Below is a listing of these states and their respective tipped minimumwages, as well as a listing of NewEnglandstates' minimum wages. New England General MW Tipped MW Definition ofTipped Worker Connecticut $7.65 $5.41 At least $10weekly for full-time employees or $2.00 daily for part-time in hotelsand restaurants. Not specified for other industries. Maine $6.75 $3.38 More than $20per month Massachusetts $7.50 $2.63 More than $30per month New Hampshire $5.15 $2.38 More than $20per month Rhode Island $7.40 $2.89 Not specified Vermont $7.53 $3.65 Morethan $30 per month for employees in hotels, motels, tourist places, andrestaurants who customarily and regularly receive tips for direct andpersonal customer service. NoTipped MW Rates GeneralMW Alaska $7.15 California $6.75 Minnesota $6.15 (largeemployers <$625K) $5.25 (smallemployers >$625K) Montana $6.15 (grossannual sales <$110K) $4.00 (grossannual sales >$110K) Nevada $6.15 Oregon $7.80 Washington $7.93 SOURCES:1. Act 21 Research and Analysis in Support of the LivableIncome Study Committee, by Thomas Kavet, Deborah Brighton,Douglas Hoffer and Elaine McCrate, November, 1999. www.leg.state.vt.us/jfo/topics.htm 2. Department of Employment and Training, 2004 OESdata. 3. U.S. Department of Labor, Employment StandardsAdministration Wage and Hour Division, Minimum Wages for TippedEmployees, Dec 11, 2006, http://www.dol.gov/esa/programs/whd/state/tipped.htm andMinimum Wages Laws in the States, Dec 11, 2006, http://www.dol.gov/esa/minwage/america.htm. Home* Legislation* Education * CommunityOrganizing * Research Take Action * Contact Us Vermont Livable Wage Campaign21 Church Street, Burlington, VT 05401 802.863.2345 x8 livablewage@pjcvt.org ©Peace& Justice Center |
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