AUGUSTA, Maine — A bill to alter part of Maine’s minimum wage law approved by voter referendum in 2016 will head to the Maine House and Senate with a bipartisan 11-2 endorsement following a vote Wednesday morning by the Legislature’s Labor, Research and Economic Development Committee.
The bill in question, LD 673, restores the tip credit to Maine’s minimum wage laws. The tip credit allows employers to pay workers such as waiters and bartenders a lower base minimum wage — currently $5 an hour in Maine — because those workers receive a portion of their income from tips. The bill proposes no changes to the minimum wage itself, which following the 2016 referendum went from $7.50 an hour to $9 this year and will ramp to $12 by 2020.
Supporters of restoring the tip credit argue that many tipped employees earn more with it than without it and that restoring it will relieve pressure on employers because they won’t have to pay tipped employees higher wages, which forces them to employ fewer people or limit employee benefits. Opponents argue that eliminating the tip credit and giving servers the minimum wage provides paycheck predictability and, in many areas of Maine, would increase salaries.
The vote on the bill came after it was amended with a provision that would require employers to make up the gap for employees whose tips and base wage do not equal at least minimum wage. The amendment also requires employers to provide advance notice to employees affected by the tip credit of their direct wage and any use of a tip pooling arrangement.
“There was bipartisan consensus that the policy that existed before November was not perfect,” said Rep. Ryan Fecteau, D-Biddeford, who sponsored the amendment. “So we reinstated the tip credit while instituting new protections that ensure workers take home all of their hard earned pay.”
Republican Sen. Roger Katz of Augusta, who sponsored the bill, said the tip credit is one of the issues he’s heard the most about from constituents this year. At a marathon public hearing last month, 178 people testified for and against the measure.
“This is excellent news for servers and restaurant owners all across Maine,” Katz said in a written statement. “Those working in the restaurant industry overwhelmingly favor the tip credit system that has allowed many Mainers to earn a very decent wage working in restaurants and bars for tips.”
The bill next heads to the Senate for consideration. It currently has an emergency preamble, which means it would go into effect immediately, but only with two-thirds support in the Legislature as opposed to simple majorities.
Many Democrats in the Legislature have expressed opposition to altering the law that voters approved last year, but some have broken ranks, citing concerns about the impact of the elimination of a tip credit on small businesses.
Gov. Paul LePage has lobbied heavily against abolishing the tip credit but has not taken a public stance on the bill sponsored by Katz, with whom he has quarreled in the past.
Correction: An earlier version of this story stated incorrectly that LePage has lobbied against the tip credit.