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House passes minimum wage exceptions

ST. PAUL -- The Minnesota House passed a bill Monday night that would allow employers to pay a lower wage to workers who make more than $4 per hour in tips.

ST. PAUL - The Minnesota House passed a bill Monday night that would allow employers to pay a lower wage to workers who make more than $4 per hour in tips.

The bill, which passed 78-55, represents an effort by the Republican-controlled House to blunt the minimum-wage increases passed last year by the Democratic Legislature and governor.
Polarized opinions
“This is a great bill,” said Rep. Dave Baker, a Republican restaurant owner from Willmar. Owners will be able to invest in their businesses, he said, and keep prices low so more customers come in. “Our employees will win because of this bill.”
Democrats disagreed.
“This is a bad idea for Minnesota,” said Rep. Ryan Winkler, DFL-Golden Valley, who carried the minimum-wage increase bill last year. “These are workers who deserve a break.” Rep. Tim Mahoney, DFL-St. Paul, called it a “tip-theft bill.”
The bill faces long odds in the DFL-controlled Senate and governor’s office.
“I don’t see it being considered as a bill in the Senate,” Majority Leader Tom Bakk, DFL-Cook, said Monday.
The companion bill in the Senate has had no committee hearings.
Gov. Mark Dayton called last year’s minimum-wage increase “one of the best things that Minnesota has done. It puts money in the pockets of those consumers all over the state.”
“I don’t see any reason to tamper with it,” he said.
Under the bill, employers could pay the current minimum wage of $8 per hour to workers who earn an average of at least $12 per hour in pay and tips during a work week. Those workers would keep their tips as well.
Those not earning $12 or more in wages and tips would get the wage called for under the law, plus their tips.
The minimum wage rises to $9 in August and $9.50 next year. Beginning in 2018, increases will be pegged to inflation, capped at 2.5 percent. The commissioner of labor and industry can suspend the increase in any given year if economic circumstances warrant.
Bill sponsor Rep. Pat Garofalo, R-Farmington, has said current law unfairly allows servers, who are often the highest paid restaurant employees, to get raises under the new minimum wage structure, leaving less for workers who don’t receive tips.
He also said the law adds costs for restaurants that will result in fewer server jobs and more automation over time.
Further changes
The bill was amended on the floor Monday night to include more disclosure to potential employees about the pay structure and more protection against sexual harassment of servers. A provision that would have exempted workers covered under collective bargaining agreements was removed.
In addition, an exemption in current law that allows resort owners to pay a lower wage to foreign workers who come for the summer and get room and/or board was eliminated. This was a favorite provision of Bakk, who has several such resorts in his northern Minnesota district.
The bill was also amended to allow employees to keep the full amount of tips offered on credit cards.
Several amendments were defeated, including one that would have required businesses that pay an executive more than $1 million per year to pay workers at least $15.78 per hour.
The Minnesota Department of Employment and Economic Development reported in the first quarter of 2014 that the median pay in wages and tips for the state’s 48,000 servers was $8.68 per hour. Ninety percent earned less than $11.93 per hour.
According to a 2013 survey by the Minnesota Restaurant Association, wages and tips for servers averaged $22 per hour in the Twin Cities metro area and $18 statewide.
Last spring, Minnesota passed legislation taking the state from one of the nation’s lowest minimum-wage states to one of the highest. No Republicans in either chamber voted for the increase.
Unlike Minnesota, the federal government and most states allow employers to factor tips into minimum-wage calculations.

Rachel E. Stassen-Berger contributed to this report.

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