"Politics is not about power. Politics is not about money. Politics is not about winning for the sake of winning. Politics is about the improvement of people's lives. It's about advancing the cause of peace and the justice in our country and in our world. Politics is about doing well for people." -Senator Paul Wellstone (1944-2002)

 

The Vermont Livable Wage Campaign will finalize its 2008 legislative priorities 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 points on tipped minimum wage
Click here for information on the raise!
Click here to read the Senate voting record

Priority #2: Mandatory Sick Day
Priority #3: Increase the Federal Minimum Wage

VLWC Economic Justice State Legislative Voting Record 2005-2006

VLWC Legislative History
Minimum Wage Increase History (2000-2006)
Legislative Summer Study Report on Livable Income (1999)

How to keep track of Vermont Legislative Activity

How to contact your Representative or Senator
 

VLWC Legislative Priorities 2007
The VLWC steering committee approved the following priorities for the 2007 legislative session in early January 2007. We always welcome your feedback on our legislative work and your involvement in lobbying our state representatives and senators to support our economic justice initiatives.

PRIORITY #1: Increase the Tipped Minimum Wage 
We advocate for the tipped minimum wage to increase by $1.00 every year until it becomes the same rate as the non-tipped minimum wage. Currently the tipped minimum wage base rate is $3.65/hour. It will likely meet the non-tipped minimum wage rate in four years.

This policy change will eliminate the tipped worker minimum wage so Vermont has one minimum wage rate like seven other states (AK, CA, MN, MT, NV, OR, and WA).

We also call for a redefinition of tipped workers in Vermont. A tipped worker is currently defined as any worker who regularly earns"$30 or more in tips per month." We suggest revising the definition to "$200 or more in tips a month." This policy change will make sure workers who receive a small amount of tips are paid a higher minimum wage because tips do not provide a large source of income.

Between 2000 and 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 (49 cents).

Eliminating the tipped employee minimum wage or redefining who is a tipped worker would subject all employers to one minimum wage rate. Currently, employers who have tipped workers are exempted from paying the higher minimum wage. Allowing a tipped credit means the public subsidizes wages of tipped workers for certain industries (restaurant, tourism).


TIPPED WORKERS RECEIVE A RAISE! BILL PASSES IN MAY 2007!

On Wednesday May 9^th, the Vermont House of Representatives approved S. 27, a bill to increase the minimum wage for tipped workers in Vermont. Currently the tipped minimum wage is $3.65/hour. A worker is considered a “tipped worker” and can be paid the $3.65/hour if he/she earns $30 or more a month in tips on a regular basis. About 3,500 workers are considered tipped workers in Vermont. Occupations range from waitstaff to housekeepers in hotels/motels to bell-hops to pizza delivery people. The bill now moves directly to the Governor since the Senate passed the exact language of S. 27 in March. The Governor is expected to sign the bill.

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. This COLA (cost of living adjustment) is the same index that is currently attached 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 a tipped worker. S. 27 revises this definition to $120 or more in tips a month.  The current definition had not been adjusted since 1957. Redefining the tip threshold excludes low-tipped and some part-time tipped workers who earn small tips due to low priced menus from being paid the tipped minimum wage. Instead, these workers will now 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 not moved 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 the value of their wages as the cost of living increases. Waitstaff comprise the majority of tipped workers in Vermont. Menu prices, the base for most tip calculations, usually do not annually adjust and thus, tips do not automatically adjust to reflect the growing cost of living. 

Tipped workers are legally guaranteed the general minimum wage ($7.53) via the “tipped credit.” Currently, Vermont law requires an employer to fill in the gap when an employee makes less than the general 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 General Committee in February, many employees do not know the “tipped credit” provision is Vermont law.

“Most people would agree that you cannot meet your basic needs on minimum wage in Vermont,” said Emma Mulvaney-Stanak, Director of the Vermont Livable Wage Campaign at the Peace & Justice Center. “We need jobs that move people towards a livable wage. Even a full time minimum wage job ($7.53/hr, 40 hr a week) puts a family of three below the official poverty line ($17,000) (2007 figure). Increasing the tipped minimum wage will help workers in our service economy.”

Some employers are also unaware of tipped minimum wage laws. For example “tip pooling” is illegal. Pooling is the practice of collecting all tips earned by waitstaff at an establishment per night and dividing wages among all waitstaff equally at the end of the night. By law, waitstaff should not be required to share his/her tips in any manner.

Rebecca White, a tipped worker at a Church St. restaurant in Burlington, testified that the common practice at her establishment was to “tip out” non-tipped workers at the end of the night for helping to bus tables, mix drinks or seat patrons. Under the Vermont tip rules, such “tip sharing” practices cannot be required by the employer.

Kimberly Ead, 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 even cover the cost of my gas to drive to work. I am lucky. I don’t have children to support. Most tipped workers are not making large amounts of money and are often hit hard by bad weather, slow tourist seasons, and low tips by foreign tourists unfamiliar with our tipping system. It is extremely difficult to budget your tips—the main source of income because the tipped minimum wage is so low—to stretch to cover all your basic needs through the slow periods since tips fluctuate all year.”

“The legal guarantee that tipped workers will always receive the general minimum wage does not always happen,” said Megan Harlow, a college student who has worked in two restaurants in southern Vermont. “Not all employers or even employees know the law and some employers try to avoid paying more in wages. There were several pay periods when I never received a tipped credit in my paycheck even though my tips caused my total wage to fall below the general minimum wage. Until I heard about this bill in the Statehouse, I had no idea I was entitled to the minimum wage when my tips are low.”

“Livable wage is a matter of human dignity and basic respect for our neighbors, co-workers and fellow Vermonters no matter what your occupation happens to be,” said Mulvaney-Stanak. “Vermont’s economy relies heavily on our service industry. Tipped workers deserve a long overdue raise.”

 
Read the Voting Record
Thank those Senators who did the right thing for working people and ask Senators who voted against a real raise for tipped workers, WHY!

The House of Representatives approved the bill by voice vote. No voting record is available on this issue for representatives.
 

The Miller Amendment postpone any increase to the tipped minimum wage until Jan 1, 2009 and such an increase would be based on the cost of living adjustment (CPI-U). The amendment failed. The Condos, Campbell and Miller amendment removed a 14 cent increase to the tipped minimum wage effective immediately if the bill passed the Legislature and postponed an increase to the tipped minimum wage until Jan 1, 2008. Both amendments preserved the redefinition of the threshold for who can be paid the tipped worker minimum wage based on amount of tips collected in a month.
 

Tipped minimum wage talking points

PRIORITY #2: Support Vermont Commission on Women with Mandatory Sick Day Legislation

VLWC supports the Vermont Commission on Women's work to pass a bill to require all employers to provide each employee who works 30 or more hours a week five paid sick days. Fewer than 30 hours per week with a pro-rated number of sick days.

PRIORITY #3: Increase the Federal Minimum Wage

CURRENT STATUS: On Thursday February 1st, 2007 the US senate passed a bill to boost the federal minimum wage by $2.10 an hour over the next two years, bringing the federal minimum wage to $7.25 an hour by 2009. The bill contained amendments with controversial tax cuts for small businesses.  The increase in the minimum wage is the first in a decade.  It was approved by a 94-3 vote, finishing a nine day debate on the senate floor.  The bill will now be reconciled with the House version that contained no tax provisions passed on January 10, 2007. 

Check back for more details as the Congress moves to compromise on the final version of the bill.

Click here for more information and to take action!

How to keep track of Vermont Legislative Activity:

Go to the Vermont Legislative Home Page

From there you can:
- Monitor committee and bill activity
- Download copies of bills
- Browse the Legislative Directory and find emails, phone numbers and contact information for your Senators or Representatives!

2007 Tipped Minimum Wage FAQ

Did we not just raise the minimum wage in Vermont?  Have we not done enough?
The VT Legislature adjusted the minimum wage in June 2005 which enacted one step increase from $7.00/hour to $7.25/hour on January 1, 2006 and then an annual cost-of-living adjustment increase based on the rate of inflation (CPI-U) on January 1, 2007.  The minimum wage increased to $7.53/hour on Jan.1, 2007. While the Legislature has done much to raise the minimum wage over the past 10 years (25 cents in 1996, 40 cents in 1997, 10 cents in 1998, 50 cent increases in 1999 and 2000, 50 cents in 2004, 25 cents in 2005, 25 cents in 2006, and 28 cents in 2007), there was little, if any, gain in the 1980s and early 1990s.  Thus, in real dollars, those at the bottom of the wage scale have lost ground since 1969 ?? a time when a four-person household with one wage earner making the minimum wage could still meet their family's basic needs.

What is the tipped minimum wage?
Vermont has two different minimum wage rates??the general minimum wage ($7.53/hour in 2007) and the tipped worker minimum wage ($3.65/hour in 2007). A tipped employee is any employee who "customarily and regularly" receives more than $30 per month in tips. This definition is the minimum level definition for tipped workers. The tipped minimum wage rate did not increase on January 1, 2007. If the tipped minimum wage increased at the same rate as the general minimum wage since 1990 it would be $4.53 today.

What counts as a "tip"?
A "tip" is a voluntary payment determined by a customer. The amount of the tip cannot be dictated by the employer. For example, the 15% gratuity a restaurant may require for large parties for service is not a "tip."

What is a tip credit?
A tip credit allows employers to count tips as wages for purposes of minimum wage requirements and thus pay a lower cash wage rate ($3.65/hour) to the tipped worker. The maximum tip credit amount in Vermont 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 must equal at least the general minimum wage ($7.53/hour) (base wage plus tips). If an employee's tips and base wage do not equal $7.53 for the hours 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 Vermont statute in 2003 [Public Act No. 67 Sec 25a]. On the federal level, the tipped employee definition of monthly tips was revised from $20.00 to $30.00 in 1977. Essentially, tipped workers have had the same definition since the 1977 federal revision.

Aren't tipped employees guaranteed at least $7.53/hour for every hour they work if they do not bring in enough tips every week? So why do we need to raise the tipped minimum wage rate?
Yes, tipped employees must receive a sum of tips and a base wage equal to the Vermont minimum wage at all times. If an employee does not receive 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 per hour rate. With two different minimum wage rates, employers who employ non-tipped employees are subject to the higher minimum wage rate while employers of tipped workers (primarily restaurants) are allowed to pay a much lower rate. Employers of tipped workers can pay a lower minimum wage rate while legally crediting tips from the public to pay the rest of the wage. Essentially, the public subsidizes the wages of tipped workers. Tips are unpredictable during certain parts of the year (ex: slow business in winter). Also customers are not bound by law to leave a minimum tip, which creates a precarious situation for workers. Tps do not automatically increase as the cost of living increases. It is the role of the employer to provide workers with at least a cost of living increase through the base wage. We must strive to support livable wage jobs in Vermont, not jobs that guarantee only a minimum wage.

Don't most tipped employees make well above the minimum wage with so many tips?
Including tips in the calculation of tipped employees' earnings usually does mean that they make above the minimum wage.  While most tipped employees make above the minimum wage, most are NOT employed in expensive restaurants in Vermont. In smaller establishments, tipped employees often spend some hours doing "non-tipped" work: set-up, cleaning, restocking, break-down.   

Most tipped workers do not have employer-provided health insurance, dental insurance or a retirement plan. As a result, these workers often have to pay for these basic needs out of pocket which can be a significant expense. Service jobs cannot be exported to another state or country.  These are jobs that will stay in Vermont and are one of the occupations that are projected to add a great number of jobs in the future.  A high-road economic strategy means making the jobs we have livable jobs.

Doesn't paying servers more means paying "back of the house" less (i.e. cooks and kitchen staff)?
Requiring all employers to pay the minimum wage is part of a high-wage strategy. If the workers in the "back of the house" are already being paid minimum wage, employers cannot legally lower wages below the general minimum wage rate. Moreover, if we increased the tipped minimum wage at same rate as the general minimum wage since 1990 it would be $4.53/hour today (an additional $28 a week for a full time server (avg 32 hrs a week)). Ultimately, employers should strive to pay livable wages to all workers in the front and back of the house.

How many Vermonters earn the tipped minimum wage?
According to the Vermont Department of Labor, there are an estimated 4,000 tipped employees in Vermont. Most tipped employees are employed in the leisure and hospitality fields which is a large occupational field in Vermont. Tipped employees are predominately employees in hotels, motels, tourist places, and restaurants who customarily and regularly receive tips for direct and personal customer service.

What is the federal tipped minimum wage?
The federal tipped minimum wage rate has remained at $2.13 per hour since 1997. The federal definition of a tipped employee is any employee engaged in an occupation in which he or she customarily and regularly receives more than $30 a month in tips.

Do all states have tipped minimum wage?
No. Seven states do not allow the use of tip credit under their state minimum wage laws. These states include Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington. The minimum cash wage for tipped employees is the same as the state's general minimum wage rate. The states have the following minimum wage rates as of January 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't most tipped minimum wage jobs mostly held by teenagers?
Since there are only 4,000 tipped minimum wage workers in Vermont it is difficult to find exact data on such a small group of workers. However, data on the general minimum wage workforce contain similar trends for tipped minimum wage workers. According to 1999-2001 Current Population Survey (CPS) data, 60% of all workers earning less than $8.00/hour are over 30 years old.

Will raising the tipped minimum wage hurt small businesses in the hospitality industry operating with such small profit margins? Maybe some would not be able to remain competitive.
Increasing the tipped minimum wage in Vermont would equal the playing field for all businesses because all businesses will face the same cost increases instead of allowing no annual increase to the base rate for tipped minimum wage employers. The 1999 Act 21 Summer Legislative Study on Livable Income found that the minimum wage ($5.75 at the time) could be increased to $7.00 /hour in the year 2000 without negatively impacting the overall Vermont economy (see REMI model analysis ?? Issue #3).  These findings included the impact on small businesses and accounted for a general minimum wage increase which affects approximately 18,000 workers. In the case of tipped workers, an increase would impact approximately 4,000 tipped workers. 

Will increasing the minimum wage lead to inflation? 
There is no good evidence one way or the other that increasing the minimum wage will lead to increased inflation. There are examples over the last thirty years (specifically OR and WA) when wage hikes did not spur inflation and other times when inflation occurred with no wage hikes.  The bottom line is that inflation has been constantly on the rise, whether workers received a wage increase or not. Since the last time the minimum wage was raised nationally in 1997, the economy has created millions of new jobs and inflation has fallen to its lowest level in a generation.  

What do 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 increased since 1997.  In response to lack of U.S. Congressional action on the minimum wage, 7 states have only one minimum wage rate for all employees (tipped and non-tipped). An additional 8 states have higher tipped minimum wage rates than Vermont. Below is a listing of these states and their respective tipped minimum wages, as well as a listing of New England states' minimum wages.