Restaurant Association of Maryland Releases Statement Strongly Opposing Proposed Bill to Increase Wages for Tipped Employees in Montgomery County and Eliminate Tip Credit

by Patrick Herron

A bill that would increase wages for tipped employees will be introduced at the Montgomery County Council meeting on Tuesday, September 19. Bill 35-23, County Minimum Wage – Tipped Employees would adjust the calculation of the minimum wage for tipped workers and phase out the tip credit amount under the Montgomery County’s minimum wage law. Currently, businesses are required to pay servers $4.00 per hour; if a server does not make the current minimum hourly wage ($15-16.70) per hour, employers are required to make up the difference.

If the bill passes, there will be incremental increases over the next five years:
• $4.00 per hour, until July 1, 2024;
• $6.00 per hour, effective July 1, 2024 until July 1, 2025;
• $8.00 per hour, effective July 1, 2025 until July 1, 2026;
• $10.00 per hour, effective July 1, 2026 until July 1, 2027; and
• $12.00 per hour, effective July 1, 2027 until July 1, 2028

We reached out to the Restaurant Association of Maryland who provided us with the following statement:
“The Restaurant Association of Maryland strongly opposes legislation that would eliminate the tip credit. We urge the County Council to reject this legislation that would reduce the overall earnings of tipped employees.

A statewide tip credit repeal bill considered in the Maryland General Assembly failed to pass earlier this year because of strong restaurant industry opposition and scores of servers who urged lawmakers to reject it because they make significantly more money under the current tipping system. Like all workers, restaurant tipped employees must earn at least the full applicable minimum wage per hour in base wages plus tips. There is no subminimum wage for restaurant tipped employees. Under federal, state and local minimum wage laws, employers are required to make up any deficiencies if a tipped employee does not earn enough in base wages plus tips to make at least the full minimum wage.

Tipped employees are among the highest earners in full-service restaurants, earning a median of $27 per hour including tips, according to National Restaurant Association research. Servers at some restaurants can earn $40 or more per hour including tips. Restaurant server earnings would significantly decrease if the tip credit was eliminated because most restaurants would be forced to impose a service charge on customer checks to cover the substantially higher labor costs. Customers are unlikely to tip on top of service charges. And there would be no incentive for servers to provide the best possible customer service because they would no longer be rewarded with tips.

The restaurant industry and servers will continue to oppose such poor public policy proposals in Montgomery County and elsewhere in Maryland.”


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