The Legislature and Gov. Paul LePage have repealed part of the minimum wage law enacted by voters in November 2016 by restoring the tip credit for Maine businesses that employ servers and other workers who receive tips.
Passage of the bill restores the tip credit, which means tipped workers will be paid an hourly wage of half the minimum wage, based on the assumption the tips they receive will elevate their overall earnings to more than the hourly minimum. The bill, which LePage signed last week, will restore the tip credit later this year.
The referendum, which passed with more than 55 percent of the vote, bumped the minimum wage for non-tipped workers to $9 per hour this year and will incrementally raise it to $12 by 2020.
Though the bill passed 110-37 in the House and 23-12 in the Senate, it failed to receive a two-thirds endorsement in the latter body, which prevents it from going into effect as an emergency measure. Instead, it will take effect 90 days after the Legislature adjourns, which will be sometime following the busy summer tourist season.
The elimination of the tip credit has been a major argument against the minimum wage increase initiative since months before the 2016 referendum, with opponents arguing that it could lead to lower wages for tipped workers who often earn far beyond minimum wage pay. The bill was sponsored by Sen. Roger Katz, R-Augusta, and LePage has lobbied heavily for restoration of the tip credit.
In April, hundreds of people crowded into the State House for one of the most heavily attended and longest public hearings of 2017. Testimony in favor of the tip credit was not unanimous; many testified that in some areas of the state, tipped workers could earn more if they were paid the straight minimum wage.
LePage signed the bill into law on Friday, according to Peter Steele, LePage’s communications director.
Correction: An earlier version of this report incorrectly stated when the tip credit would be restored.