PRESQUE ISLE, Maine — Tony Sullivan, owner of the local Governor’s Restaurant franchise, is facing a lot of uncertainty amid the coming changes for tipped employees under the new minimum wage law.
Maine voters approved last year’s Question 4 raising the state’s minimum wage to $12 an hour by 2020 and phasing out the system for tipped employees by bringing their wages to at least $12 an hour by 2024
With its end of the tip credit system, under which tipped workers like waiters are paid a base wage half the regular minimum wage, the law is “drastically” changing the half-century-old dining business model and the profession of food servers, Sullivan said.
“A lot of full-service restaurants may have to change to more of a counter service restaurant,” said Sullivan. Some restaurants can also “see the writing on the wall, in terms of having little kiosks and tablets at the tables for people to order.”
Sullivan has owned and managed the Main Street restaurant for 20 years, and said it has been a strong business, now employing 45 workers and a loyal following. Prior to the 2016 referendum, which took effect this year as the state’s minimum wage increased to $9, Sullivan said that entry-level workers would start at least one dollar higher than the minimum wage and receive merit increases over time.
“Bakers make anything from $14 to $16 an hour,” he said. The 20 servers earn “close to $20” an hour on average with tips and their base wage ($3.75 as of last year, now $5).
The tip system “allow us to offer food at a reasonable price, and they can offer an additional stipend to the server for good service,” Sullivan said. “We feel that the servers are an arm of management.”
It’s not clear how much tipped employees earn on average across Maine. The Maine People’s Alliance, the group that spearheaded the referendum, estimated that restaurant servers were making $8.93 an hour on average in 2015, while the Maine Restaurant Association has pegged the average hourly earnings at more than $16 an hour. The federal Bureau of Labor Statistics estimated that Maine restaurant servers in 2015 earned $10.79 an hour on average and $22,450 on an annual basis.
Servers are also guaranteed by law to earn at least minimum wage, with the restaurant responsible for paying the difference between the tipped and regular minimum wage if tips do not make up the difference. Sullivan said he’s never seen that happen in his 20-year experience.
He added that he and many in Maine’s dining industry are not opposing the increases to the regular minimum wage under the law, but they are worried and still opposed to the end of the tip credit system.
They’re hoping that lawmakers will step in to change that part of the minimum wage initiative and reinstate the tip credit.
Kelly Anstiss, a server at Governor’s, is among tipped employees who like the system the way it is. The group Restaurant Workers of Maine came out against ending the tip credit and is leading a petition drive to exempt the tip credit system from the new law.
“I’ve been doing this a long time,” said Anstiss, who commutes from Mapleton. “I have a college degree but I prefer to do this.”
Anstiss said she’s able to manage the natural fluctuations in earnings from tips, one of the reasons backers of the referendum cited in advocating for ending the tip credit.
“When you get a little bit extra, you put a little bit extra away. If there’s a time when you make a little bit less, you have that backup.”
Sullivan said that if the tip credit is not going to be reinstated, he thinks many restaurants will have to change in some way, including raising prices, adopting new technology or limiting sit-down service.
“That may include having to go to tablets at the table or different scenarios where we could have a service area for people who wanted to tip could get waited on, and then another area they could come up to the counter,” Sullivan said.
