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How N.H., Vt. minimum wage bills would impact restaurant servers

  • Jesse's bartender Kelsie Courtemanch, of West Hartford, right, passes off a glass of wine to waiter Matt Shea, of Sunapee, to deliver to a customer in Hanover, N.H., Wednesday, April 3, 2019. The New Hampshire Legislature is considering raising server pay from 45 percent of the state minimum wage to 50 percent. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Gesine Prado, middle, and Raymond Prado, right, of Hartford, share a desert as server Chris Lane, of Cornish, left, delivers drinks to the dining room at Jesse's in Hanover, N.H., Wednesday, April 3, 2019. Lane opposes a raise in the percent of the state minimum wage that servers earn. "I never get a paycheck," said Lane. "It's all taken in taxes." He said that he makes a comfortable living based on tips while working under 30 hours a week, which gives him time to pursue an interest in buying and selling art. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Customers settle the bill after dinner at Jesse's in Hanover, N.H., Wednesday, April 3, 2019. New Hampshire legislators are debating a raise in server pay from 45 percent of the state minimum wage to 50 percent, a change some servers say is unneccessary. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Servers, from left, Gage Merritt, of New London, Matt Shea, of Sunapee, and Jessica Fortuna, of Quechee, relax for a moment while waiting for food to come out of the kitchen at Jesse's in Hanover, N.H., Wednesday, April 3, 2019. They would be among those affected if the New Hampshire Legislature raises wait staff pay from 45 percent of the minimum wage to 50 percent of the minimum wage. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Kathryn Hayes, of Woodstock, reaches through a window for clean plates during a serving shift at Jesse's in Hanover, N.H., Wednesday, April 3, 2019. The New Hampshire Legislature is considering raising server pay from 45 percent of the state minimum wage to 50 percent. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.



Valley News Business Writer
Saturday, April 06, 2019

HANOVER — Tony Barnett has a stash of uncashed paychecks bound in rubber bands in his office safe that employees have never bothered to pick up.

“We have to hunt people down to give them their checks,” said Barnett, owner of Jesse’s and Molly’s restaurants in Hanover.

That’s because the employee paychecks often are, literally, worthless. They are paychecks for the food servers and bartenders who work at either Molly’s or Jesse’s and, by the time taxes are taken out for the income they earn in tips, there is frequently little or nothing left to cash.

“It means nothing to them,” Barnett said of the paychecks in his safe.

The uncashed employee paychecks are emblematic of the unique nature of working as a server in the restaurant business, where waitstaff and bartenders earn their income principally through tips from customers. And servers’ pay has become a complicating issue in bills in both the New Hampshire and Vermont legislatures to raise the minimum wage.

The Vermont Senate in February approved a measure to increase state’s minimum wage in steps from the current $10.50 per hour to $15 per hour in 2024. The bill has now shifted to the House, which last week held hearings on it.

A few weeks later in March, New Hampshire’s Democrat-controlled state Senate voted, 14-10 along party lines, to raise the minimum wage — currently pegged to the federal $7.25-per-hour level — through gradual hikes to $12 per hour in 2022. The House had passed a similar bill a week earlier.

Proponents of the bills — mostly Democrats — argue that lifting the minimum wage will improve the lives of low-income people and better reflect the reality of inflation. Everyday prices have risen more than 16 percent since the last time the federal minimum wage was changed in 2009. Opponents — mostly Republicans — argue a higher minimum wage will lead to a slowdown in hiring and is not required because most entry- and low-level work is already paying at least $11 per hour.

Perhaps critically, the proposed measures are not seen in either New Hampshire or Vermont to be supported by either state’s fiscally conservative Republican governor. New Hampshire Gov. Chris Sununu criticized the idea of a $15 minimum wage when he was campaigning for re-election, and Vermont Gov. Phil Scott vetoed a similar bill in the last session.

“The governor does not support a state minimum wage and believes any change to the minimum wage should be done at the federal level,” Sununu spokesman Ben Vihstadt said via email last week.

Regardless, the restaurant and hospitality industry in both states has been pressing legislators hard to “separate” any new minimum wage law that would apply to servers from a general minimum wage law so that it takes into account what they say is the long-standing industry practice in how servers earn money.

Although the accounting mechanisms are slightly different in each state, restaurant servers in the Twin States are tied to a lower minimum wage than other workers.

In New Hampshire, the minimum wage for employees who earn more than $30 per month through tips — known as the “tipped minimum wage” — is 45% of the applicable $7.25 per hour minimum wage, or $3.27 per hour.

In Vermont, tipped minimum wage for employees who earn more than $120 per month from tips is 50% of the applicable $10.78 per hour minimum wage, or $5.39 per hour.

Both states have written into their rules that if a server’s tip income falls below the general wage floor then the employer is required to pay the difference to bring the server up to the general per-hour minimum wage.

While that may seem to paint a bleak picture for the waitstaff’s income, the opposite is often true. As a rule, servers are the highest-paid non-management employees in the restaurant business.

Sometimes, they are even paid more than the house managers.

“I know servers that make over $1,000 in tips a week,” said Joe Anderson, a server at Lui Lui in West Lebanon who previously worked a server at Bentleys in Woodstock. He said he likes the social aspect of the work and the flexibility. “It would be nice if the tip (minimum) wage was a higher percentage, but it won’t make a lot of difference.”

Sarah Lindberg, who was a bartender at Jesse’s for 18 years before becoming the restaurant’s general manager three years ago, said she had second thoughts when offered her new position because she wasn’t sure she’d make more as a salaried employee.

“I was doing quite well and it definitely required some negotiations back and forth,” she said.

Lindberg said she never had a problem with the tipped minimum wage when she worked as a server.

“As a tipped employee, getting a paycheck is not why you come to work,” Lindberg said. “It’s really a profession that you get out what you put into it.”

A server or bartender, she said, is working with customers who can be either “celebrating life or coming in with heavy stuff, and you’re there to make their day and treat them like they want to be treated.”

“And if you do it well, you get rewarded really well,” Lindberg said, declining to disclose how much she earned in tips. “If you’re a server or bartender coming to work for a paycheck, you’re in the wrong industry.”

Matt Shea, a waiter and bartender at Jesse’s, said he is skeptical about the need to raise the tipped minimum wage if it means it would leave less money for raises for kitchen workers or even for marketing the restaurant to bring in more customers.

“Fifty cents an hour is not going to make a lot of difference for me,” said Shea, who likes the “flexibility” working as a server affords him as he studies for a nursing degree. “It’s all going to go to taxes anyway.”

The issue of separating out the tipped minimum wage from the general industry remains in flux in both states, although, from the restaurant industry’s perspective, progress has been made in New Hampshire.

When the new Granite State minimum wage bill finally passed the Senate, the restaurant industry persuaded lawmakers to cap the tipped minimum wage at $4 per hour so that as the general minimum wage rises in coming years it doesn’t push up the tipped minimum wage along with it.

Without the freeze, the tipped minimum wage would rise to $4.50 when the New Hampshire applicable minimum wage hits $10 per hour in 2020 and $5.40 per hour when it would reach $12 per hour in 2022 under the proposed bill.

But the New Hampshire House bill proposes raising the tipped minimum wage to 50 percent of applicable minimum wage, which would push it to $5 per hour in 2020 and $6 in 2022.

Although labor advocates argue that even the higher minimum wage levels under consideration do not amount to a minimally decent livelihood, the restaurant owners contend a more generous tipped minimum would prevent them from paying more to “back of the house” workers such as cooks, prep team members and dishwashers who earn much less than tipped servers.

“Restaurants operate on very thin margins, 3% to 5% in most cases,” said Eric Roberts, owner of the Lui Lui restaurants in West Lebanon and Nashua, N.H. “The servers make good money, so there needs to be a way to cap the tipped wage so restaurant owners can pay the cooks and other hard-working folks in the back more money.”

In Vermont, the minimum wage bill that passed out of the Senate and now is being taken up in committee in the House, like the current law, calls for the tipped minimum wage for servers to equal 50 percent of the general minimum wage, which would be $5.75 per hour in 2020 and steadily progress to $7.50 per hour in 2024.

The Vermont Chamber of Commerce, which merged with the state’s restaurant and lodging trade association several years ago, is leading the effort in Montpelier to “decouple” the increase in the tipped minimum wage from the scheduled increases in the new proposed minimum wage law.

The Vermont Chamber would prefer the minimum wage bill not advance at all given the financial burden it says will hurt many small businesses, said Charles Martin, the group’s government affairs director.

But given the inevitability of the bill’s passage, Martin said the chamber favors a “phase-in” approach that would extend the rollout period on reaching a $15 per hour minimum wage to 2030.

“We’re pretty concerned about a proposal that would raise the minimum wage by about 50 percent over the next four years when we see only a 2.5 percent annual growth rate,” Martin said. “There’s not going to be the business growth to meet those payment obligations.”

As for whether Vermont lawmakers will accept the Chamber’s argument that an uncapped tipped minimum wage will mean there is less money available to raise wages for nonserver employees, Martin said he’s hopeful.

“They’re listening,” he said.

John Lippman can be reached at jlippman@vnews.com.