Wednesday, August 02, 2006

GOP House Minimum Wage Bill Attacks Worker Tips, States Rights

Most workers are covered by two minimum wage laws, the federal law and their state law. The minimum wage that applies is the higher of the two. (The exception is the small number of workers whose employer is not engaged in interstate commerce). Twenty-three states (and D.C.) have enacted minimum wages that are higher than the federal minimum wage.

A special case involves tips. Both the federal minimum wage and most state minimum wages allow employers to reduce the wages of workers who receive tips so that the total of wages and tips are equal to the minimum wage. Seven states do not reduce the minimum wage by the amount of tips. That is, for the state minimum, the tips are on top of the minimum.

The federal minimum wage is now $5.15/hr. California, for example, has a minimum wage of $6.75/hr. and does not reduce that minimum for tips. So a waitress in California must receive an hourly wage of $6.75 plus tips she receives.

The House passed a bill (H. R. 5970, now before the Senate) that increases the minimum wage from $5.15 to $7.25 per hour. However, a provision in that bill, Sec. 402, called Tipped Wage Fairness, will force states such as California to reduce the states minimum wage by the amount of the tips received. This section of the act would take effect immediately, even though the federal minimum wage will not take effect until January 1, 2007 and will not be higher than the California minimum wage until June 1, 2009. After June 1, 2009, a waitress in California may be paid less than she is now paid.

This provision, to actually reduce the pay of some minimum wage employees was supported by the National Restaurant Association and other business groups. It was passed in the House with Republican support. These are the same people who support "states rights", the ability of states to make their own laws. In this case, they want the federal government to override the state governments.

Harold Meyerson Op Ed Column in the Washington Post

Tips at Issue in Minimum Wage Bill, Erica Werner (AP) Washington Post, 8/2/06

An Estate Tax Twist Reverses Party Roles On Minimum Wage, Jeffrey Birnmaum, Washington Post, 8/3/06