Efforts to do away with the two-tiered system that allows some employers to pay subminimum wages are gaining traction across the country, in part thanks to a resurgence in demand at restaurants as well as increases in wages across the board in recent years.
There are upcoming votes to do away with the two-tiered wage system in the District of Columbia, Nebraska, Nevada, and Portland, the most populous city in Maine. Michigan already voted to do away with its subminimum wage, and employers are getting ready for the change.
When it comes to compensating employees, there are only a few groups that can get away with paying workers less than minimum wage, and the justifications behind those exceptions vary. For employers operating businesses that allow for tipping, this subminimum wage lets them operate more cheaply, but that often comes at the expense of their employees.
Currently, all but eight states have a two-tiered minimum wage system in place, including some combination of hotel employees, car washers, airport personnel, and, most commonly, waitresses and waiters. Some states allow employers to pay wait staff as little as $2.13 per hour, so long as their tips make up the difference between the subminimum and regular minimum wage.
"You are sacrificing your tips to meet the employers' minimum-wage obligations," said Ryan Stygar, a labor lawyer focusing on wage theft cases.
In theory, this should mean that all tipped workers make at least minimum wage in their state. The potential to make even more in tips through good service is one of the major draws for workers in this field. However, in practice, keeping track of how much workers get in tips isn't straightforward, and there's not much that workers can do if their tips aren't cutting it.
"In reality, who's monitoring this complex two-tier system?" a former chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, Sylvia Allegretto, told The New York Times. "The onus is on you, the worker, to possibly enrage, or at least annoy, your boss, who also, coincidentally, controls your schedule."
That issue only becomes more pronounced if workers are in some way marginalized. Undocumented workers are particularly vulnerable due to the potential risk of exposure if they attempt to fight for the wages they're owed.
"It doesn't really matter if you have documents or not - I think folks are still getting underpaid in general," said Sylvia Gaston, an undocumented waitress in Queens. "However, when it comes to uplifting your voices and speaking about it, the folks who can get a little bit more harsh repercussions are people who are undocumented."
The last time there was a thorough review of compensation compliance by employers at restaurants, regulators found that roughly 84% of all employers were in violation of labor laws. That review ended in 2012, and there hasn't been another like it since.
Despite that lackluster oversight, the Department of Labor does occasionally hold employers accountable for denying workers proper pay. Since the middle of September this year, 274 workers in Austin were awarded $230 thousand, 65 workers in North Carolina were awarded $157 thousand, and an unstated number of Boston restaurant workers were awarded $98 thousand in back pay.
Doing away with the subminimum wage would obviously wind up costing employers considerably, but it might also have some benefits. The benefits of a higher wage for employees are clear, but employers could also see improvements in service, worker morale, and turnover rates.
"This is not costless," said David Cooper with the Economic Policy Institute. "But for a long time, we haven't been internalizing the costs of paying workers less than they can live on."