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News Journal Article About
Labor Lawsuit Sparks Industry Backlash
A
recent story in theDelawareNews Journal highlighted
a recent lawsuit (and countersuit) involving
restaurant hosts being paid at a base rate that is less
than the Delaware minimum wage. The Middletown
restaurant is being sued by The Delaware Department of Labor,
seeking to recover wages for three workers. This is a case
that could reverberate nationally as activists and politicians
continue to fight for an increased minimum wage, especially for
restaurant workers.
The case, which started as a complaint in Justice of the Peace
Court in Wilmington, will now play out in Superior Court after
Texas Roadhouse sued the labor department seeking to have
the court rule that hosts are tipped workers. When workers are
classified as “tipped employees,” restaurants can set an hourly
base wage lower than the regular minimum wage with customers’
gratuities credited toward achieving full minimum wage.
In June, the state Labor Department brought an action against
the steakhouse chain to recover wages owed to three people
employed as hosts at the Middletown restaurant from December
17 through February 24, arguing that hosts must be paid the
full hourly minimum wage. According to the lawsuit, the wages
paid to the three hosts when combined with the tips from the
tip pool “at all times equaled or exceeded” the state minimum
wage. When tips don’t equal the regular minimum wage, tipped
workers are given “make up pay” to bring the hourly wage to the
minimum, according to company spokesman Travis Doster. The
minimum wage in Delaware became $8.25 an hour as of June 1.
“Nobody works for less than minimum wage at the restaurants.
They either make it or exceed it,” Doster said.
Critics say the system legislates pay inequality and
disproportionately harms women and people of color. It invites
abuses by employers, including “wage theft” where owners keep
a portion of the tips, Myotte said. Restaurant workers should
make a fair hourly minimum wage paid for by the employer and
receive customers’ tips, she said.
It’s become a campaign issue in the presidential election with
Democratic candidate Hillary Clinton saying she wants to end
the “disgrace” of the tipped minimum wage. Another Democratic
candidate, Senator Bernie Sanders from Vermont, introduced
legislation in July that would phase out the federal provision
that permits employers to pay tipped workers $2.13 an hour.
Delaware Secretary of Labor John McMahon said he’s aware of
national initiatives to end the two-tier wage system, but in this
case the department is just trying to enforce the existing laws.
The article went on to say that “A server working Friday night
might make more than the minimum hourly wage. But if you
draw the Tuesday afternoon shift, you’re back to making
minimum wage. Somebody wins, and somebody loses” and that
“a server’s compensation shouldn’t depend on how attractive
they are or how flirtatious they are.” Other noted flaws in the
tipping system were noted, particularly the “top up” of a tipped
worker’s pay to the minimum hourly wage. It was noted that
“according to the White House report, about 10 percent of
workers in predominantly tipped occupations report that their
hourly wages fall below the full minimum hourly wage. The
failure by employers to make sure that workers earn minimum
hourly wage is the most common violation of wage and hour
requirements,” the White House report says.