[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE BIDEN-HARRIS ATTACKS
ON TIPPED WORKERS
=======================================================================
HEARING
Before The
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
of the
COMMITTEE ON EDUCATION AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, SEPTEMBER 18, 2024
__________
Serial No. 118-62
__________
Printed for the use of the Committee on Education and the Workforce
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: edworkforce.house.gov or www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
57-405 PDF WASHINGTON : 2024
COMMITTEE ON EDUCATION AND THE WORKFORCE
VIRGINIA FOXX, North Carolina, Chairwoman
JOE WILSON, South Carolina ROBERT C. ``BOBBY'' SCOTT,
GLENN THOMPSON, Pennsylvania Virginia,
TIM WALBERG, Michigan Ranking Member
GLENN GROTHMAN, Wisconsin RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana Northern Mariana Islands
JAMES COMER, Kentucky FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah MARK TAKANO, California
BOB GOOD, Virginia ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan MARK DeSAULNIER, California
MARY MILLER, Illinois DONALD NORCROSS, New Jersey
MICHELLE STEEL, California PRAMILA JAYAPAL, Washington
RON ESTES, Kansas SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana LUCY McBATH, Georgia
KEVIN KILEY, California JAHANA HAYES, Connecticut
AARON BEAN, Florida ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas TERESA LEGER FERNANDEZ, New Mexico
LORI CHAVEZ-DeREMER, Oregon KATHY E. MANNING, North Carolina
BRANDON WILLIAMS, New York FRANK J. MRVAN, Indiana
ERIN HOUCHIN, Indiana JAMAAL BOWMAN, New York
MICHAEL A. RULLI, Ohio
Carson Middleton, Staff Director
Veronique Pluviose, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
KEVIN KILEY, California, Chairman
GLENN GROTHMAN, Wisconsin ALMA ADAMS, North Carolina,
ELISE M. STEFANIK, New York Ranking Member
JAMES COMER, Kentucky ILHAN OMAR, Minnesota
MARY MILLER, Illinois HALEY M. STEVENS, Michigan
ERIC BURLISON, Missouri MARK TAKANO, California
C O N T E N T S
----------
Page
Hearing held on September 18, 2024............................... 1
OPENING STATEMENTS
Kiley, Hon. Kevin, Chairman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 2
Adams, Hon. Alma, Ranking Member, Subcommittee Workforce
Protections................................................ 3
Prepared statement of.................................... 4
WITNESSES
Boucher, Tom, CEO and Owner, Great New Hampshire Restaurants,
Inc........................................................ 6
Prepared statement of.................................... 8
DeCamp, Paul, Member, Epstein, Becker & Green, P.C........... 12
Prepared statement of.................................... 14
Jayaraman, Saru, President, One Fair Wage.................... 29
Prepared statement of.................................... 31
Barron, Simone, Co-Founder, Full-Service Workers Alliance.... 38
Prepared statement of.................................... 40
ADDITIONAL SUBMISSIONS
Chairman Kiley:
Letter dated September 19, 2024, from the American
Association of Cosmetology Schools..................... 94
Foxx, Hon. Virginia, a Representative in Congress from the
State of North Carolina:
Additional testimony from Simone Barron.................. 96
Scott, Hon. Robert C. ``Bobby'', a Representative in Congress
from the State of Virginia:
Democratic staff document entitled, ``A Slap on the
Wrist, How it Pays for Unscrupulous Employers to Take
Advantage of Workers''................................. 52
EXAMINING THE BIDEN-HARRIS ATTACKS
ON TIPPED WORKERS
----------
Wednesday, September 18, 2024
House of Representatives,
Subcommittee on Workforce Protections,
Committee on Education and the Workforce,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:03 a.m., in
Room 2175, Rayburn House Office Building, Washington, DC, Hon.
Kevin Kiley (Chairman of the Subcommittee) presiding.
Present: Representatives Kiley, Grothman, Miller, Burlison,
Foxx, Adams, Takano, Hayes, and Scott.
Staff present: Annmarie Graham Barnes, Deputy
Communications Director; Mindy Barry, General Counsel; Sheila
Havenner, Alex Knorr, Legislative Assistant; Trey Kovacs,
Professional Staff Member; Andrew Kuzy, Press Assistant;
Georgie Littlefair, Clerk; John Martin, Deputy Director of
Workplace Policy/Counsel; Hannah Matesic, Deputy Staff
Director; Carson Middleton, Staff Director; Audra McGeorge,
Communications Director; Kevin O'Keefe, Professional Staff
Member; Jacob Pletcher, Staff Assistant; Seth Waugh, Director
of Workforce Policy; Maura Williams, Director of Operations;
Gavin Anderson, Minority Intern; Ilana Brunner, Minority
General Counsel; Stephanie Lalle, Minority Communications
Director; Jessica Schieder, Minority Economic Policy Advisor;
Dhrtvan Sherman, Minority Research Assistant; Bob Shull,
Minority Senior Labor Policy Counsel; Brashanda McCoy, Minority
CBCF Intern; Marie McGrew, Minority Press Assistant; Eleazar
Padilla, Minority Staff Assistant; Mason Pesek, Minority Labor
Policy Counsel; Veronique Pluviose, Minority Staff Director;
Banyon Vassar, Minority Director of IT.
Chairman Kiley. The Subcommittee on Workforce Protections
will come to order. I note that a quorum is present. Without
objection, the Chair is authorized to call a recess at any
time.
Today the Committee convenes to examine an issue that
affects millions of hard-working Americans, especially those in
our restaurants, bars and hotels: tipped workers. These workers
are the face of the American economy, linking our citizens with
the goods and services on which their lives depend.
Their livelihoods depend not only on the tips they earn,
but also on the policies that govern their pay. Unfortunately,
a misguided, Biden-Harris administration rule is putting their
jobs and wages at risk. Under the Fair Labor Standards Act,
there is a system in place that has been around for decades. It
is called the tip credit.
It allows employers to count a portion of an employee's
tips toward the minimum wage. This system has worked for years.
It allowed tipped employees to be paid a base wage that is less
than the Federal standard, as long as their combined earning
with tips exceeds the Federal minimum wage. It is common sense,
and it helps the workers because most tipped workers earn far
more than the Federal minimum wage.
A recent study by the National Restaurant Association found
that the median tipped worker earns $27.00 an hour, and that is
not an anomaly, it is the norm. The current system gives tipped
workers the opportunity to thrive, and it does not just help
them, it helps the restaurants and small businesses that employ
them.
Unfortunately, across the country we are seeing anti-worker
policies that phaseout the tip credit altogether. In Seattle,
for instance, raising the base wage for tipped employees led to
job losses. One Seattle-based restaurant server said we need to
have some balance here because right now we are losing jobs, we
are losing hours, we are losing tipped income, and it is not
good.
I am grateful to have that worker here today to testify.
There are over 4 million Americans working in tipped
occupations, and they are telling us very clearly; do not take
away the tip credit. In a recent survey 90 percent of tipped
employees said they prefer the current system, and 87 percent
are afraid that if their employers are forced to pay a higher
base wage without counting tips, their earnings will go down.
These workers are telling us the economic reality of their
workplaces and we should listen to them. Sadly, the Biden-
Harris administration has not listened. The Department of
Labor's 2021 Tip Rule restricts the tip credit drastically.
What is more, if an employee spends just 30 minutes on duties
that do not produce tips, the employer can no longer claim the
tip credit at all. It is essentially a requirement on small
businesses to track their employees' every movement, minute by
minute.
It is burdensome, invasive, and altogether out of touch
with the realities of working life. Fortunately, just last
month we saw a major victory for common sense. The U.S. Court
of Appeals for the Fifth Circuit struck down the 2021 Tip Rule,
calling it contrary to the Fair Labor Standards Act.
This ruling was a win for both workers and the small
businesses, but the fight is far from over. This Committee is
dedicated to supporting workers, small businesses, and the
customers who rely on them. The tip credit benefits all three.
It provides flexibility for businesses, ensures tipped workers
earn more, and helps maintain a thriving service industry.
With that, I look forward to the testimony of our esteemed
witnesses, and yield to the Ranking Member for an opening
statement.
[The Statement of Chairman Kiley follows:]
Statement of Hon. Kevin Kiley, Chairman, Subcommittee on Workforce
Protections
Today, the Committee convenes to examine an issue that affects
millions of hardworking Americans, especially those in our restaurants,
bars, and hotels -- tipped workers. These workers are the face of the
American economy, linking our citizens with the goods and services on
which their lives depend. Their livelihoods depend not only on the tips
they earn but also on the policies that govern their pay.
Unfortunately, a misguided Biden-Harris rule is putting their jobs and
wages at risk.
Under the Fair Labor Standards Act, there is a system in place that
has been around for decades called the tip credit. It allows employers
to count a portion of an employee's tips toward the minimum wage. This
system has worked for years. It allows tipped employees to be paid a
base wage that is less than the federal standard, as long as their
combined earnings, with tips, exceed the federal minimum wage.
It is common sense. It helps the workers, because most tipped
workers earn far more than the federal minimum wage. A recent study by
the National Restaurant Association found that the median tipped worker
earns $27 an hour. This is not an anomaly; it is the norm. The current
system gives tipped workers the opportunity to thrive. It does not just
help them -- it helps the restaurants and small businesses that employ
them.
Unfortunately, across the country we are seeing anti-worker
policies that phase out the tip credit altogether. In Seattle, for
instance, raising the base wage for tipped employees led to job losses.
One Seattle-based server said, ``We need to have some balance here,
because right now, we're losing jobs, we're losing hours, we're losing
tipped income, and it's not good.'' I am grateful to have that worker
here to testify this morning.
There are over four million Americans working in tipped
occupations, and they are telling us very clearly: do not take away the
tip credit. In a recent survey, 90 percent of tipped employees said
they prefer the current system. 87 percent are afraid that if their
employers are forced to pay a higher base wage without counting tips,
their earnings will go down. These workers are telling us the economic
reality of their workplaces, and we should listen to them.
Sadly, the Biden-Harris administration has not listened. The
Department of Labor's 2021 tip rule restricts the tip credit
drastically. What is more, if an employee spends just 30 minutes on
duties that do not produce tips, the employer can no longer claim the
tip credit at all. It is essentially a requirement on small businesses
to track their employees' every movement minute by minute. It is
burdensome, invasive, and altogether out of touch with the realities of
working life.
Fortunately, just last month, we saw a major victory for common
sense. The U.S. Court of Appeals for the Fifth Circuit struck down the
2021 tip rule, calling it contrary to the Fair Labor Standards Act.
This ruling was a win for both workers and small businesses, but the
fight is far from over.
This Committee is dedicated to supporting workers, small
businesses, and the customers who rely on them. The tip credit system
benefits all three. It provides flexibility for businesses, ensures
tipped workers earn more, and helps maintain a thriving service
industry.
______
Ms. Adams. Thank you, Mr. Chairman, and I also want to
thank the witnesses for joining us today. In one of the richest
countries in the world no one working full-time should be
living in poverty. Sadly, that is the reality for millions of
low-wage workers in this country.
Currently, under the Fair Labor Standards Act, an employer
may pay a tipped employee a sub-minimum wage of no less than
$2.13 per hour and use the employee's tips to meet the
employer's obligation to pay the Federal minimum wage of $7.25
per hour. However, the set minimum wage results in lower pay,
more uncertainty and higher poverty rates for tipped workers
than for non-tipped workers.
Through error, or outright wage theft, employers too often
fail to ensure that their workers are making the full minimum
wage. According to a 2014 report by the White House National
Economic Council, and the Department of Labor, more than 1 in
10 surveyed workers in predominantly tipped occupations report
that they received hourly wages, including tips, below the
Federal minimum wage.
While my republican colleagues may point to a handful of
high earning tipped workers as evidence of the system's
success, we must confront the reality of most tipped employees.
Tipped workers are unfortunately paid less per hour than non-
tipped workers, and they have less access to benefits such as
paid sick leave, healthcare, short-term disability, life
insurance, and paid vacation.
Now, these workers face systemic challenges, and often
suffer from inadequate pay, and rampant abuse. The conditions
for tipped workers under the Trump administration were even
worse. In addition to the fact that roughly half of all jobs in
the leisure and hospitality sectors were lost between February
and April 2020.
The Trump Department of Labor pushed to allow low road
employers to steal tipped workers hard earned pay. For example,
the Trump-era Tip Rule would have allowed employers to take the
tips that tipped workers earn, and share them with untipped
workers, and managers, as long as the employers pay at least
$7.25 per hour, and do not take tip credit--a tip credit. In
practice, the rule would allow employers to steal tipped
workers' wages to line their own pockets, or subsidize the
wages of their non-tipped staff.
According to a 2017 report from the Economic Policy
Institute, this rule would have resulted in an estimated 5.8
billion dollars in stolen wages from tipped workers annually.
As we look ahead it is clear that republicans are laying the
groundwork for Project 2025, which threatens to further erode
the protections that workers rely on.
In stark contrast, congressional democrats are committed to
advancing legislation that will lift millions of hard-working
Americans out of poverty and hold unscrupulous employers
accountable. The Raise the Wage Act would gradually increase
the Federal minimum wage to $17.00 per hour and phaseout all
sub-minimum wages.
The Let's Protect Worker's Act would hold employers
accountable by closing loopholes, and enforcing penalties for
those who neglect worker's safety and fair compensation. Our
economy, our communities and our country are stronger when we
reward and support hard working families.
Congressional democrats are committed to raising workers'
standards of living through policies like expanding access to
affordable childcare, overtime pay, and paid time off to take
care of loved ones, and ensuring workers can stand together,
and negotiate for better wages and benefits. As we proceed with
today's hearing, let us remember the real faces and stories
behind these statistics.
Let us work together to build a system that supports and
protects all workers. Thank you, Mr. Chairman. I yield back.
[The Statement of Ranking Member Adams follows:]
Statement of Hon. Alma Adams, Ranking Member, Subcommittee on Workforce
Protections
Thank you, Mr. Chairman. I also want to thank our witnesses for
joining us today.
In one of the richest countries in the world, no one working full-
time should be living in poverty. Sadly, that is the reality for
millions of low-wage workers in this country.
Currently, under the Fair Labor Standards Act, an employer may pay
a tipped employee a subminimum wage of no less than $2.13 per hour and
use the employee's tips to meet the employer's obligation to pay the
federal minimum wage of $7.25 per hour.
However, the subminimum wage results in lower pay, more
uncertainty, and higher poverty rates for tipped workers than for non-
tipped workers. Through error or outright wage theft, employers too
often fail to ensure their workers are making the full minimum wage.
According to a 2014 report by the White House National Economic Council
and the Department of Labor, more than 1 in 10 surveyed workers in
predominantly tipped occupations report they received hourly wages,
including tips, below the full federal minimum wage.
While my Republican colleagues may point to a handful of high-
earning tipped workers as evidence of the system's success, we must
confront the reality of most tipped employees. Tipped workers are,
unfortunately paid less per hour than non-tipped workers, and they have
less access to benefits such as paid sick leave, health care, short-
term disability, life insurance, and paid vacation. These workers face
systemic challenges and often suffer from inadequate pay and rampant
abuse.
The conditions for tipped workers under the Trump Administration
were even worse. In addition to the fact that roughly half of all jobs
in the leisure and hospitality sectors were lost between February and
April of 2020, the Trump Department of Labor pushed to allow low-road
employers to steal tipped workers' hard-earned pay.
For example, the Trump-era tip rule would have allowed employers to
take the tips that tipped workers earn and share them with untipped
workers and managers as long as the employers pay at least $7.25 per
hour and do not take a tip credit. In practice, the rule would allow
employers to steal tipped workers' wages to line their own pockets or
subsidize the wages of their non-tipped staff. According to a 2017
report from the Economic Policy Institute, this rule would have
resulted in an estimated $5.8 billion in stolen wages from tipped
workers annually.
As we look ahead, it is clear that Republicans are laying the
groundwork for Project 2025, which threatens to further erode the
protections that workers rely on.
In stark contrast, Congressional Democrats are committed to
advancing legislation that will lift millions of hard- working
Americans out of poverty and hold unscrupulous employers accountable.
The Raise the Wage Act would gradually increase the federal minimum
wage to $17 per hour and phase out all subminimum wages. The LET'S
Protect Workers Act would hold employers accountable by closing
loopholes and enforcing penalties for those who neglect worker safety
and fair compensation.
Our economy, our communities, and our country are stronger when we
reward and support hardworking families. Congressional Democrats are
committed to raising workers' standard of living through policies like
expanding access to affordable child care, overtime pay, and paid time
off to take care of loved ones and ensuring workers can stand together
and negotiate for better wages and benefits.
As we proceed with today's hearing, let us remember the real faces
and stories behind these statistics. Let us work together to build a
system that supports and protects all workers.
Thank you Mr. Chairman, I yield back.
______
Mrs. Miller [presiding]. Pursuant to Committee Rule 8-C,
all Committee members who wish to insert written statements
into the record may do so by submitting them to the Committee
Clerk electronically in Microsoft Word format by 5 p.m., after
14 days from the date of this hearing, which is October 2,
2024.
Without objection, the hearing record will remain open for
14 days after the date of this hearing to allow such statements
and other extraneous material referenced during the hearing to
be submitted for the official hearing record.
I note for the Subcommittee that some of my colleagues, who
are not permanent members of this Subcommittee, may be waving
on for the purpose of today's hearing. I will now turn to the
introduction of our distinguished witnesses.
Our first witness today is Mr. Tom Boucher, who is the
Owner of Great New Hampshire Restaurants, Incorporated, which
is located in Bedford, New Hampshire, and who is testifying on
behalf of the National Restaurant Association.
Our second witness is Mr. Paul DeCamp, who is a Member of
Epstein, Becker and Green, P.C., located in Washington, DC, and
is a practicing wage and hour attorney.
Our third witness is Ms. Saru Jayaraman, who is President
of One Fair Wage in New York, New York.
Our final witness is Ms. Simone Barron, who is Co-Founder
of Full-Service Workers Alliance in Seattle, Washington. We
thank the witnesses for being here today, and we look forward
to your testimony. Pursuant to Committee Rules, I would like to
ask each of you to limit your oral presentation to a 5-minute
summary of your written statement.
I would also like to remind witnesses to be aware of their
responsibility to provide accurate information to the
Subcommittee. I will first recognize Mr. Boucher.
STATEMENT OF MR. TOM BOUCHER, OWNER, GREAT NEW HAMPSHIRE
RESTAURANTS, INC., ON BEHALF OF THE NATIONAL RESTAURANT
ASSOCIATION, BEDFORD, NEW HAMPSHIRE
Mr. Boucher. Thank you, Chairman Kiley, Ranking Member
Adams, and distinguished members of the Subcommittee. Thank you
for the opportunity to testify today. My name is Tom Boucher,
and I am the CEO and owner of Great New Hampshire Restaurant.
What began as one small restaurant in 1984, has grown into nine
locations employing 800 people, and serving over 2 million
guests annually.
I am proud to say we are celebrating our 40th anniversary
this year. In 1987 I started as a server at T-Bones, learning
every aspect of the business from the ground up. This is not
just my story, it is the story of thousands in our industry.
The restaurant industry is unique because it provides upward
mobility, offering opportunities for anyone regardless of
background to start in entry level positions, and build lasting
careers through hard work and dedication.
Over 60 percent of Americans have worked in a restaurant.
Eight out of ten restaurant owners, including myself started in
those same roles. The restaurant industry does not just provide
jobs, it provides a path to success offering opportunities for
personal growth, financial independence, and entrepreneurship.
That said, running a restaurant is not easy. Margins are
razor thin, and well-meaning legislation or regulation, if it
does not account for the realities of our industry, and have
serious unintended consequences, and today I want to focus on
two key issues affecting the restaurants and their employees,
tip credit and the Department of Labor's 80/20/30 Rule.
The tip credit is vital to restaurants like mine. It allows
employees to earn significantly more than the Federal minimum
wage, while helping restaurants manage labor costs. At my
restaurant, service consistently earned 20 and 30 dollars an
hour, with some earning even more. No tip server ever makes
less than minimum wage, and they are protected by the Federal
law to ensure that.
Our employees understand how important the tip credit is to
their livelihoods. In fact, some of my employees launched a
campaign called We Like Our Tips.com to voice their support for
keeping the tip credit intact. They know that eliminating the
tip credit would limit their earning potential.
We have already seen what happens when tip credit is
removed. In New Hampshire, two restaurants switched to a flat
hourly wage model, and their servers left for other restaurants
where they could earn more through tips. Both businesses
eventually closed. The very work that these policies are meant
to help end up losing out.
Here in Washington, DC, nearly 1,000 restaurant jobs have
been lost after voting members passed Initiative 82 to phaseout
the tip credit. A survey found that 86 percent of local
restaurant operators believe rising tip minimum wage harms
their operations leading to increased prices, reduced staff and
closures.
These are real world outcomes of policies that do not
consider the unique needs of the restaurant industry. Without
the tip credit, labor costs for restaurant operators would
skyrocket. We would be forced to substantially raise prices,
cut hours, or in the worst case shut down.
The ripple effect would hurt local farmers, suppliers, and
other businesses. When restaurants close, the entire local
economy suffers. In addition to preserving the tip credit, I
would like to address the Department of Labor's 80/20/30 rule.
This rule restricted the amount of time tipped employees could
spend on non-tipped tasks, creating unrealistic and unnecessary
burdens.
In the fast-paced world of restaurants, employees often
switch tasks, as we call it ``on the fly.'' A server might
reset tables, restock items, or roll silverware, all part of
ensuring the best possible customer experience. Tracking and
limiting these tasks was just not practical.
It was impossible. Thankfully, the Fifth Circuit of Appeals
struck the rule down, recognizing that it did not reflect the
realities of the industry. We need to ensure that this kind of
burden does not return. That is why we support H.R. 1621, the
Tipped Employee Protection Act, to prevent the reintroduction
of a similar rule.
Chairman Kiley, Ranking Member Adams, and distinguished
members of the Subcommittee, thank you again for the
opportunity to speak with you today. In conclusion, I want to
emphasize that the decisions made here have real-world
consequences.
The restaurant industry is the cornerstone of local
economies, providing jobs, fostering community engagement, and
offering pathways to economic mobility and personal success.
The success of restaurants like mine, depends on policies that
allow us to operate substantially, and contribute to the local
and national economy.
Eliminating the tip credit or reinstating rigid rules like
the 80/20/30 Rule would hurt employees, small business owners,
and the communities that rely on us. I urge you to carefully
consider the broader impact of these policies and protect the
flexibility and structure that allows the restaurant industry
to thrive. Thank you for your time.
[The Statement of Mr. Bocher follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Miller. Thank you, Mr. Boucher. I will next recognize
Mr. DeCamp.
STATEMENT OF MR. PAUL DECAMP, MEMBER, EPSTEIN, BECKER & GREEN,
P.C., WASHINGTON, D.C.
Mr. DeCamp. Good morning, Chairman Kiley, Ranking Member
Adams, and distinguished members of the Subcommittee. Thank you
for inviting me to testify at this hearing to discuss tipped
workers. The Fair Labor Standards Act sets forth the Federal
requirements regarding minimum wage, overtime, and child labor.
For most workers, the income from their job consists
primarily or entirely of wages paid by their employer. Some
jobs involve a second, often substantial source of income in
addition to employer-paid wages, tips from customers, clients,
or patrons.
For nearly 60 years the law has recognized the concept
known as the tip credit, which allows employers in certain
circumstances to count a portion of the tips their employees
receive as satisfying the minimum wage, while paying a lower
direct wage.
In essence, the tipped credit acknowledges the reality from
the standpoint of ensuring that workers have the protections of
the minimum wage, someone who receives $7.25 per hour directly
from her employer, is on an equal economic footing with someone
who receives at least that same amount in direct wages and tips
combined.
In the late 1970's the Department of Labor began parsing
the various tasks restaurant servers, bartenders, and other
employees perform, trying to identify situations where the
Department believed that the employer should not be able to
take the tip credit.
This activity culminated in 1988 with the Department's so
called 80/20 Rule, an enforcement policy which in general
terms, employers lose the ability to take the tip credit for
tasks that do not directly and immediately produce tips, if the
employee spends more than 20 percent of the work week on those
activities.
Nearly every court that considered the issue deferred to
the Department's view applying both Chevron Deference and the
Supreme Court ruling in Auer v. Robbins. Beginning in 2009, the
Department under four successive administrations, reversed the
policy on 80/20 taken by the previous administration.
In 2021, the current administration issued a regulation
codifying the 80/20 principle, along with the new concept that
an employer may not take the tip credit if a worker spends more
than 30 continuous minutes on tasks that do not generate tips.
Two trade associations challenged the 2021 final rule in Court.
After oral argument before the United States Court of
Appeals for the Fifth Circuit, before the court issued its
decision, the Supreme Court handed down its decision in Loper
Bright Enterprises v. Raimondo, which overruled Chevron.
Now, instead of deferring to an agency's preferred
interpretation of the statute at the first sign of textual
ambiguity, as had been the case for the past 40 years, courts
considering the validity of a regulation must independently
discern the meaning of the statute, using all the available
tools of statutory construction.
Late last month, the Fifth Circuit issued its decision in
Restaurant Law Center against Department of Labor, applying
Loper Bright, the court concluded that the 2021 regulation
fails under the Administrative Procedure Act, both because it
conflicts with the text of the FLSA, and because it is
arbitrary and capricious.
The Fifth Circuit emphasized that the statute focuses on an
employee's occupation, not how much time she spends pursuing
tips. The court then vacated the regulation. H.R. 1612, the
Tipped Employee Protect Act, would amend the FLSA in a way that
is in line with the Fifth Circuit's recent ruling. The bill
clarifies that the tip credit is available so long as the
employee receives sufficient tips and hourly earnings to
satisfy minimum wage.
This approach is entirely consistent with the historical
purpose of the tip credit, ensuring that tipped employees are
no worse off than non-tipped employees with respect to the
protections of the Federal minimum wage. In recent years there
have been various executive and legislative efforts to
eliminate the tip credit, which would require employees to pay
tipped employees the full minimum wage.
These efforts are, in my view, misguided for several
reasons. First, tipped workers currently have total earnings,
including tips, that average $15.51 per hour, which is more
than double the minimum wage. Second, when given the choice of
receiving tips, along with a wage subject to the tip credit, or
else an all-in menu pricing concept with no tipping, 97 percent
of tipped employees prefer the ability to receive tips.
Third, customers overwhelming prefer the option of tipping,
to having that choice taken away from them. Fourth, roughly 3
in 4 American labor economists agree that reducing the tip
credit leads to a loss of jobs in service industries.
Finally, economic data show that reducing or eliminating
the tip credit does not lead to an increase in employees'
weekly earnings. The current tipping system, including the tip
credit does not hurt workers, it helps them. Eliminating the
tip credit would benefit neither workers nor consumers.
The FLSA enables tipped employees to achieve substantial
earnings, and we should continue to allow the law to do its
work. This concludes my prepared remarks. I welcome any
questions the members of the Subcommittee may have. Thank you.
[The Statement of Mr. DeCamp follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mrs. Miller. Thank you, Mr. DeCamp. I will now recognize
Ms. Jayaraman.
STATEMENT OF MS. SARU JAYARAMAN, PRESIDENT, ONE FAIR WAGE, NEW
YORK, NEW YORK
Ms. Jayaraman. Jayaraman. Good morning, my name is Saru
Jayaraman, I am the Co-Founder and President of One Fair Wage.
I am also the Director of the Food Labor Research Center at the
University of California Berkeley. For the last 22 years, we
have spent, actually thousands and thousands of hours
collecting surveys from tens of thousands of restaurant workers
and tipped workers across the country.
They have overwhelmingly told us, after decades, that their
top concern is their wages, which makes sense, knowing that the
restaurant industry is by far the absolute lowest paying
employer in the United States of America. Every year the U.S.
Department of Labor puts out a list of the ten lowest paying
jobs. Seven of the ten are in the restaurant industry, in fact,
the seven lowest paying, and four of the seven are tipped
occupations, even when you take tips into account.
That is because the wage structure in the restaurant
industry dates back to Emancipation. Prior to Emancipation,
waiters in the United States were mostly white males. They
actually received a full wage, no tips. After Emancipation,
restaurants sought the ability to hire newly freed black
people, black women in particular, not pay them a wage, and
force them to live entirely on a new concept that had just come
from Europe.
Now in Europe tips were always on top of a wage, never
instead of a wage. It was Emancipation and Jim Crow America
that allowed restaurants to change the concept of tipping for
the first time in world history from being an extra bonus on
top of a wage, to becoming the entirety of the wage itself.
That became law in 1938, as part of the New Deal, and is
the origin of the sub-minimum wage for tipped workers, which is
a ridiculous $2.13 an hour today. Today, still, 160 years later
since Emancipation, tipped workers are overwhelmingly women,
disproportionately women of color, more than two-thirds women.
They are largely women working in very casual restaurants and
bars across the country.
Their median wage, including tips, according to the
American Community Survey is $15,000.00. That is including
tips, and that is an average of $7.40 an hour including tips.
That is a median, meaning half of the workers earn less. That
has resulted in an enormous amount of economic instability.
It results in the fact that tipped workers earn--suffer
from three times the poverty rate of other workers, use food
stamps at double the rate of other workers, and have the
highest levels of wage theft, of any industry in the United
States, according to the U.S. Department of Labor, and every
Department of Labor in the United States.
There are seven states that have done it differently for
decades, California, Oregon, Washington, Nevada, Minnesota,
Montana and Alaska, and today we bring findings, looking at the
last couple of years since the pandemic comparing the seven
states that have had a full minimum wage to the 43 states that
have not. The seven states have outperformed the 43 states on
every measure.
They have outperformed the 43 states in terms of restaurant
establishment growth, higher in the 43 states--in seven states
since the pandemic. They have outpaced 43 states with a sub-
minimum wage in terms of employment growth in restaurants, and
they have outpaced the 43 states in terms of wages, including
tips.
Washington State, where Ms. Barron is from, has actually
outpaced all 43 states according to the National Restaurant
Association's data itself. Washington State has outpaced other
states in terms of establishment growth, and employment growth.
The seven states are doing well. They provide a full
minimum wage with tips on top. Tipping is robust in those
states, it is the same or higher as it is in the 43 states with
the sub-minimum wage for tipped workers. The pandemic made this
disparity between the states much worse.
With the pandemic workers reported that their tips went
down, harassment went up. Two-thirds of tipped workers reported
they could not get unemployment insurance because in most
states they were told their wages were too low to qualify for
benefits. With the extreme amounts of both tip reduction and
harassment increase, 1.2 million restaurant workers walked off
the job, saying we no longer--70 percent reported that we are
leaving because we no longer can put up with the low wages in
this industry.
As a result, we have tracked thousands of restaurants
across the country that have raised wages, in fact, to the full
minimum wage and higher with tips on top in order to recruit
and retain staff. There is no better data to show that workers
want this, than the fact that they left the industry in droves,
saying they cannot tolerate the wage structure in the industry
any longer.
It is why workers have been winning wage increases in city
after city, State after State. It is why it is moving with so
much momentum right now, and why we are having this hearing
today. Thank you.
[The Statement of Ms. Jayaraman follows:]
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Mrs. Miller. Thank you, and finally I will recognize Ms.
Barron.
STATEMENT OF MS. SIMONE BARRON, CO-FOUNDER, FULL-SERVICE
WORKERS ALLIANCE, SEATTLE, WASHINGTON
Ms. Barron. Good morning, and thank you Chairman Kiley,
Ranking Member Adams, for the opportunity to testify. My name
is Simone Barron, and I have been a tipped worker in the full-
service restaurant industry for 36 years. I have worked in
several cities across the country, including Indianapolis and
Chicago, but I am coming to you today from Seattle, Washington,
where I have been a tipped worker for the past 24 years.
Washington State eliminated its tip credit in the 1980's
and in 2014, when Seattle passed the $15 Now wage law, I was
making nearly $10.00 an hour plus tips. As of today, the rates
are $19.97 per hour for the largest operators, and $17.25 per
hour for the smallest. These rates are set to increase to over
$20.00 per hour for both large and small operators on January
1, 2025.
I wish I were coming to you today to say that our former
Council member, Kshama Sawant, who championed the $15 Now
movement, was correct in her statement that $15.00 an hour
would lift 100,000 workers out of poverty.
I wish I was bringing you better news today, to say that
this has all worked out somehow, and that I am living better
than ever before, but I cannot. The minimum wage hike in
Seattle is devastating my industry, my job, and my income.
Seattle is approaching its 11th consecutive wage hike since the
wage law went into effect. We did not even stop raising the
wage during the COVID pandemic.
Since the mandatory wage hike started, hundreds of
restaurants have closed or moved out of the area. Those that
remain are forced to reinvent the wheel by changing how they do
business.
As the wage hike without a tip credit has gradually eroded
our industry, workers like myself have been subject to
surcharges, service charges, non-transparent pay models,
elimination of tip lines, elimination of tipping, mandatory tip
pooling to pay non-tripped workers--thank you Patty Murray--
elimination of support staff jobs, elimination of hours and
shifts, and in many cases loss of jobs as restaurants have
closed.
The looming hike on January 1, 2025, promises to bring more
of the same with the expectation of more layoffs, rising costs
and menu prices, and even more closures. What this does to the
service industry is bad enough, but what it is doing to workers
like myself is devastating.
Our opportunity to maximize our income under a traditional
tipping structure is being stripped away, and this pushes
tipped workers closer to making minimum wage, while raising the
cost of living for all of us. Cutting hours forces to take on
two or more jobs, just to work enough to earn a paycheck. The
elimination of jobs means more people are vying for fewer and
fewer opportunities to work.
The minimum wage hike in Seattle has created instability
for workers, and it is especially true since the COVID
pandemic. With every next wage hike, one more shift gets cut,
one less guest comes in, and another job opportunity dries up.
Since the pandemic, I have yet to find footing in the industry
that I have always found stability in.
The industry that helped me go to school, raise a child,
and pursue my passions seems to have become unreliable,
unsettled, and unbalanced. These wage hikes are negatively
affecting non-tipped workers as well. My friend works for a
major produce provider in Seattle, and he explained to me that
his company is now pivoting to providing pre-prepped vegetables
to restaurants because those restaurants can no longer afford
to employ a prep cook.
What is about to happen in Seattle with the next wage hike
has been described by our small business owners as a wipeout.
When they raise the wage again, the total compensation credit
that was built into the wage hike for our smallest businesses
is set to expire.
They will now be required to pay the same that all the
larger employers pay. Their labor will go from $17.25 an hour
to north of $20.00 an hour on January 1st. Last week, our local
industry leaders held a town hall. They mentioned that because
of this impending wage hike on January 1st, menu prices would
need to increase, pay structures would have to change, and
business models would need to adapt.
All of this will result in labor costs being passed on to
customers, while workers like myself will bear the brunt,
facing the potential elimination of tips, and a predicted wave
of layoffs. Things are not so great in Seattle.
I would dare any economist here to keep an eye on what's
happening in my city, my home, watch the business closures,
look at how many jobs we have to have, measure how the cost of
living goes up every time that wage goes up, and you tell me
how this is helping me, and workers like me, because I cannot.
Thank you very much. I look forward to your questions.
[The Statement of Ms. Barron follows:]
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Chairman Kiley. Thank you very much for your testimony.
Under Committee Rule 9, we will now question witnesses under
the 5-minute rule. The Representative from Missouri, Mr.
Burlison, is recognized for 5 minutes.
Mr. Burlison. Thank you, Ms. Barron. I found your testimony
to be very compelling, particularly because you are living it.
Often you have people up here talking about how you and other
tipped workers should--what you should believe, and what you
should think.
I would think that that would be very demeaning, and
belittling, to have someone, you know, someone telling you that
you just do not know what you are talking about what is best
for you.
Ms. Barron. Absolutely. One of the things that is really
sort of just completely weird to me is that we have Ms.
Jayaraman, representing voices of the restaurant industry. As
far as I am concerned, Ms. Jayaraman is a labor activist from
Berkeley.
She has not worked in the restaurant industry. She is not
an industry worker. She has not walked a mile in my shoes. For
her to claim that she is the voice of restaurant workers like
myself, I do not get it, and most of the people that I know in
the restaurant industry do not even know who she is, and how
she can be a voice for lifting workers, I do not know how that
can happen. It is really--it does not make sense to me.
Mr. Burlison. Yes, it seemed that there is a lack of
understanding of basic economics, and the results of some of
these decisions that are made. You do not have to have an
economics degree because you are experiencing it firsthand,
right?
Ms. Barron. Yes. I am experiencing it firsthand. I mean, I
live it every day. I see it every day. I live in Seattle, where
these policies have absolutely devastated us, and more is
coming. I have--all my friends work in the industry, and the
stories that we get every day, that I get every day.
Oh, Simone, you know what? I have to get another job. Why?
Oh, well they just cut all of our shifts. Me personally, I am
affected as well. My shifts have been cut now from four to five
shifts a week down to two, and maybe one a week if I am lucky,
and that is because this impending hike that is coming on
January 1, and I am not the only one.
Mr. Burlison. Right, because if you require the employers
to pay more, then you eliminate the tipped credit, then the
only way to accomplish that is to cut hours, right? Cut staff?
You have fewer people working and providing services. It is
more expensive to pay those people, and the costs of everything
goes up, so that you have fewer people working, and the
people--and everybody is having to pay more.
Ms. Barron. Exactly, and one of the biggest things, the
first thing that always happens is the support staff gets cut.
We are talking about entry level jobs here. Those are usually
entry level jobs into the restaurant industry. Those are your
bussers, your service assistants, those are, you know, those
tend to be people of color, if you want to talk about it that
way, people who are just starting out in the industry, maybe
this is their first job in America even.
Those jobs are getting cut. They are just getting cut.
Mr. Burlison. Can you talk or touch a little bit upon--I am
sure you have seen the proposal, proposed change to eliminate
the taxes on tips.
Ms. Barron. Yes.
Mr. Burlison. That is actually going in the opposite
direction. To me this is a war against tipped workers, but I
think that this proposed change by the Trump administration
might actually--you could respond to what your thoughts are on
that.
Ms. Barron. Well, I will just--I do not know how they are
going to work out, no tax on tips. I think it is fantastic
though. The reason why I am saying, you know, if we were
sitting here talking about we want, higher wages, even if we
have a higher wage like $17.00 or more in Seattle, if I am
working in a restaurant that is really, really booming, and I
make a lot of tips 1 week, all of the taxes come out of that
paycheck.
I worked over Mother's Day weekend. I made a lot of tips.
Even though I had that higher wage, my paycheck, my wage
paycheck was only $25.00. To me, it is not about the wages, the
flat wage that I am getting, it is about the tips that I am
getting. If we have no tax on that, then I guess then I would
maybe benefit a little bit from having a higher wage, but it is
all about the tipping, it is all about the tipping.
Mr. Burlison. Mr. Boucher, can you touch on the costs of
complying with all the regulations, the burden of that, and the
impact on your businesses?
Mr. Boucher. Sure. I have actually done the calculus a
number of times over the years, and I think you alluded to
this, that there is no question that we would have to cut staff
and increase prices. In our business model, we operate on a
three-legged stool approach to decisionmaking.
We operate, make decisions what is best for the employee,
what is best for the customer, and what is best for the
business. They all have to balance that three-legged stool. In
this case, all three lose. All three would lose because we
would cut hours, cut staff, guests would get worse service, and
the business already operating on three to five cents of profit
of every revenue dollar that comes in, would shrink as well.
It would just devaState our business approach of the three-
legged stool.
Mr. Burlison. Thank you. My time has expired.
Chairman Kiley. I now recognize the Ranking Member, Dr.
Adams for 5 minutes.
Ms. Adams. Thank you, Mr. Chairman. Ms. Jayaraman, one of
the major differences between republican and democratic
administrations is the manner in which the focus is placed on
how to pay tipped workers for time spent on activities, for
which they cannot earn tips. First, for the benefit of those
among us who may not have worked in a full-service restaurant,
can you explain what side work is?
Ms. Jayaraman. Yes. Absolutely. First of all, as I
mentioned, I represent 300,000 restaurant and service workers,
150,000 petitions from workers were delivered to Congress
saying people want a raise, a full minimum wage with tips on
top. Part of the reason that they say that, why so many workers
have been asking for this is because there is such a high level
of wage theft, the highest-level effect of wage theft of any
industry.
The U.S. Department of Labor has reported an 84 percent
violation rate with regard to employers complying with the
rules surrounding the two-tiered wage system, and one of them
has to do with side work. The fact that there is plenty of work
that tipped workers are asked to do, that does not allow them
to actually get tips, rolling napkins, setting up tables,
putting ketchup bottles, or mustard bottles on the table,
condiments, all the things that--well, wiping glasses.
All the things, rolling silverware, all the things that set
up a table, but do not allow you to interact with guests. It
was really very problematic to see rules taken away during the
Trump administration protections--taken away for workers doing
side work to ensure that while they are doing side work, they
are not being paid continuously a sub-minimum wage.
We need to ensure that workers are only doing that for 20
percent of their time or less, so that most of the time they
actually have the ability to get the tips that get them to the
full minimum wage.
Ms. Adams. Is it correct that time spent on side work is
time spent not earning tips?
Ms. Jayaraman. Not earning tips.
Ms. Adams. Okay. Walk us through how the 80/20 Rule matters
for restaurant workers.
Ms. Jayaraman. Right. That is what I was saying--that there
is a very high level, unfortunately, of wage theft. That means
employers engaging in activities that do not allow workers to
get the full minimum wage, or have their rights protected.
When you have employers having workers do lots of side
work, not able to access tips, they then are not able to get
enough tips to bring them to the full minimum wage, which is
why in our surveys we found 50 percent of workers say I
regularly, consistently experience times when tips do not bring
me the full minimum wage, and the employer does not make up the
difference.
Ms. Adams. What was the Trump administration's approach to
paying restaurant workers for activities such as side work?
Ms. Jayaraman. I want to say that the Trump
administration's first act coming into office, was to push to
make tips the property of owners, rather than workers, which
was the most egregious thing that any administration had ever
done to tipped workers. When we want to talk about an attack on
tipped workers, the most precious thing tipped workers have is
their tips, on top of their wages.
The fact that the Trump administration tried to make tips
the property of owners, rather than workers was the first real
attack on tipped workers. The second was to remove protections
that they had, that would allow them to actually earn a full
minimum wage with tips.
Clearly, if they are allowed--if an employer is allowed to
pay them a sub-minimum wage, while doing excessive amounts of
side work, they actually cannot then access enough tips to
bring them to the full minimum wage.
Ms. Adams. Ms. Jayaraman, what are your thoughts regarding
the argument that paying a full minimum wage with tips on top
would kill business and reduce tipping?
Ms. Jayaraman. Yes, so as I mentioned, there are seven
states that have already--require a full minimum wage with tips
on top. Our research shows that not only have they consistently
had higher small business growth rates, job growth rates,
tipping averages in the 43 states, but in fact, during the
pandemic they had done--they much outperformed the 43 states
with the sub-minimum wage.
More recently, one fair wage, a full minimum wage with tips
on top was passed in Flagstaff, D.C., and we are seeing more
restaurants, more jobs, and higher wages including tips.
Ms. Adams. Okay, so your testimony linked the tip credit
and sub-minimum wage for tipped workers with discrimination and
sexual harassment, so how does a tip credit make that possible?
Ms. Jayaraman. With an overwhelmingly female population,
over two-thirds. These workers are vulnerable to harassment
from customers in order to have to, you know, feed their
families and tips. They have to put up with all kinds of
inappropriate customer behavior in order to feed their families
and tips, which is why the industry has the highest rates of
harassment of any industry.
Ms. Adams. Thank you very much. Mr. Chair, I yield back.
Chairman Kiley. The Representative from Wisconsin, Mr.
Grothman, is recognized for 5 minutes.
Mr. Grothman. Thank you. First of all, I guess for Mr.
Boucher or Mr. DeCamp, I guess part of the debate here today,
or what the previous speaker said, kind of implies that people
are almost destitute here if they are working as a server or a
bartender.
I talked to some of the employers in my district, just a
regular variety sports bar, and even they are amazed at the
amount of money that their employees are getting in tips. Could
either of you give a suggestion as to what either the wait
staff or the bartenders are making, say--first of all, in
general, and second on say a Friday night?
Mr. Boucher. Yes. I would be happy to answer it. As I
mentioned in my testimony, our servers are in between $20.00
and $35.00 an hour when you include their hourly wage plus
tips. In fact, we at times are challenged with trying to
promote a tipped employee into a management position because
there are times where they are earning more, especially as you
indicate on those busier weekend nights.
Our higher end concepts, with the higher check average,
they earn a significant amount of income, and it is difficult
sometimes to recruit them to want to become a manager.
Mr. Grothman. Do they make more than you guys sometimes?
Mr. Boucher. I am sorry?
Mr. Grothman. Do they make more than you guys sometimes?
Your managers? I am sure they do.
Mr. Boucher. That is what I am saying. There are times,
yes.
Mr. Grothman. Yes. I mean I was talking to one of my guys
recently. His folks are making more than yours, but Mr. DeCamp,
do you think $20.00 to $25.00 bucks an hour on tips, or do most
people make more than that?
Mr. DeCamp. It depends very much on the restaurant, but on
average they are doing very well, and with most of the
restaurants that I work with, the front of the house employees,
the servers, the bartenders and what not, tend to have total
earnings that are well above what the kitchen staff are
earning, the cooks, the prep cooks.
Mr. Grothman. Yes, way more.
Mr. DeCamp. Right. Those are the positions that people want
in the restaurants because they are lucrative, so the idea that
most tipped employees are on the edge of starvation is just
wrong. That ignores the economic reality.
Mr. Grothman. Can you give me a crack at what people are
making, you think, an hour?
Mr. DeCamp. Right. The current economic data that we have
seen suggests that the average tipped employee across the
United States between their cash wages and their tips is
earning $15.51 an hour. That is across all restaurant concepts.
Mr. Grothman. Well, they ought to come to other places
because I think they make more than that, but if that is what
you think. According to the National Restaurant Association,
tipped workers earn a median wage of nearly four times the
current Federal minimum wage.
Can you discuss the earnings? Well, we kind of covered
that. I am sorry, how high do you think people get in your
restaurant if the better people work a little bit harder? What
do you think they can work their way up to hourly?
Mr. Boucher. As I said, there are times where I have seen--
I will just give you the number. We have employees that make
between $75,000.00 and $100,000.00 a year in a tipped capacity.
Mr. Grothman. All right, that is what I thought. You can do
that. Not maybe at a base place.
Mr. Boucher. Yes.
Mr. Grothman. A little nicer than average, a particular
busy place. I will ask you here now if you have a detailed
breakdown as to what an average day would look like with you
tracking the hours of your tipped employees. Should the 30
continuous minute rule be finalized?
Do you want to give us an idea of the amount of paperwork
that is going to have to go into that?
Mr. Boucher. You are talking about the 80/20?
Mr. Grothman. Right.
Mr. Boucher. It is impossible. It is impossible to track,
and we did it as best as we could, but it is--you would have to
have--I would have to hire someone literally, to stand there
and keep track of every 2 minutes someone is rolling
silverware, as she indicated, or--and I would argue that these
other tasks that are being done, that is part of the service
that they are giving the customer.
If they are not rolling silverware for that guest, they are
just throwing silverware and a napkin on a table, that is not
exactly what our guests want. I would argue that these other
non-tipped timing is all part of the guest experience.
Mr. Grothman. I will give you one other question, and these
are great jobs, like many people I worked in the service
business when my first jobs were out there, but could you let
us know when you are hiring somebody, how much training, or
that sort of thing, goes into before you allow them to become
wait staff?
Mr. Boucher. Yes, our servers are trained for at least
seven shifts, depending on their experience, sometimes ten, and
they are paid minimum wage for those shifts.
Mr. Grothman. Okay. Within 2 weeks you can take the job. I
mean this could be compared to other jobs, you know, a tech
school degree, and maybe be an apprentice for a couple years,
within 2 weeks if I apply to your place to be wait staff, 2
weeks from now I could be making, you know, the $25.00.
Mr. Boucher. $25.00 an hour, yes. In some cases, that is
people with no experience at all.
Mr. Grothman. Right. You can even have an 18-year-old just
hired like that.
Mr. Boucher. Correct.
Mr. Grothman. Okay. Thank you.
Chairman Kiley. The Representative from California, Mr.
Takano is recognized for 5 minutes.
Mr. Takano. Thank you, Mr. Chairman. I want to thank the
witnesses for being here today. The title of this hearing,
Examining the Biden Harris Attacks on Tipped Workers, makes it
obvious that my colleagues across the aisle would like to frame
their agenda as pro-worker.
There is nothing pro-worker about advocating for the
continuation of a sub-minimum wage. The two-tier wage system
that tipped credits have created costs workers billions of
dollars a year in wage theft, and employer violations of
regulations designed to protect tipped workers occurs at
alarmingly high rates.
While there are many employers who ensure that their
employees are being fairly paid, unscrupulous employers who
seek to save on labor costs or skim off the top of earned tips
are costing American workers their livelihoods.
Too many tipped workers in this country are unable to make
a sustainable living. Ms. Jayaraman, approximately 5.1 percent
of all workers live in poverty, but for tipped workers the
share is much higher, 11.3 percent. What role does the tipped
credit play in pushing workers into poverty?
Ms. Jayaraman. I would ask, I would challenge anybody here,
any of you Congress members to try to live on $2.13 an hour,
with the bulk of your income coming from tips from your
constituents, depending on whether they like your smile, or
they like the way you behave, or your body, or whether you let
them touch you, which is the reality for the overwhelming
majority of tipped workers in the United States, who are
overwhelmingly women, disproportionately women of color.
We have the highest rates of single mothers of any
occupation, having to put up with all kinds of inappropriate
behavior from customers in order to feed their children in
tips. Why are they at more than twice the rate of poverty of
other workers? It is because tips are unreliable.
Tips go up. They go down, they go up and down shift to
shift, week to week, season to season, month to month, but your
rent and your bills do not go up and down every week, month,
season to season.
The instability of tips is why so many workers find quite
often their tips do not bring them to the full minimum wage. In
fact, as I have said, 50 percent of workers say regularly they
experience sometimes tips not bringing them to the full minimum
wage, and the employer not making up the difference because as
the U.S. Department of Labor found, an 84 percent violation
rate with regard to employers complying with these rules.
The combination of the ridiculously low wage, the
instability of tips, and the non-compliance with these rules
results in workers earning too little to feed their families,
which is why the people who feed us use food stamps at double
the rate of other workers.
Mr. Takano. Thank you so much for that. This tip credit
system also means that employers are relying on customers, as
you have said, to make up the full employee's wage, and they
often do not get to, even the Federal minimum.
You already described how the model puts at risk workers in
the workplace, and you eluded to specifically discrimination
and harassment. That is what tipped workers often have to
endure in their jobs. Is that right?
Ms. Jayaraman. That is right. Professor Katherine McKinnon,
who is the Nation's leading scholar on sexual harassment coined
the term, ``sexual harassment,'' has said that the restaurant
industry and tipped workers, in particular, have the highest
rates of sexual harassment of any industry because they have to
rely on unstable tips and the biases and harassment of
customers in order to get those tips.
She also has said that there is no policy she has seen in
her decades of work on this issue more effective at cutting
sexual harassment than actually providing these workers with a
full minimum wage, with tips on top.
It got worse with the pandemic, thousands of women reported
to us I am regularly asked, ``Take off your mask, so I can see
how cute you are before I decide how much to tip you.''
That was so pervasive. We ended up working with Professor
McKinnon to coin a new term, ``Maskual Harassment.'' That
strikes me as so humiliating and undignified for any human
being who does not have the right to a full minimum wage and
has to--this sort of leverage over them to permit that
harassment.
I mean the trouble that it would take to stand up to that
when they are on the verge--when they are in poverty. Some
opponents of paying tipped workers the full minimum wage claim
that tipped workers do not want a full minimum wage with tips
on top. What evidence do you have to the contrary?
Ms. Jayaraman. 147,000 petitions to Congress, and 1.2
million workers who walked off the job saying we no longer can
put up with these wages.
Mr. Takano. I thank you, and I yield back.
Chairman Kiley. The Representative from Illinois, Ms.
Miller is recognized for 5 minutes.
Mrs. Miller. Thank you. Mr. Boucher, how do you think a
policy to end taxes on tips would help your employees, and
would that be a positive incentive for restaurant workers?
Mr. Boucher. I think this is a flash in the pan political
moment discussing that. It is something that I cannot even wrap
my head around how that would even play out in the tax code,
and so I really do not have an opinion on that issue because I
do feel it is a political statement currently because of the
election that is coming up.
Mrs. Miller. Certainly, it would help the employees,
though?
Mr. Boucher. I would think so, but there is always going to
be ways around that, and I think, you know, where is the
Federal Government going to get the money to reconcile all
those taxes that are not going to come in?
Mrs. Miller. Well, I want to thank you for creating small
businesses that provide jobs and benefit local communities. I
am sorry that D.C. bureaucrats continue to think that they know
how to run your business better than you do, especially after
all the damage that they did to Main Street during COVID. Thank
you, and I yield back.
Chairman Kiley. The Ranking Member of the full Committee,
Mr. Scott, is recognized for 5 minutes.
Mr. Scott. Thank you, Mr. Chairman. Ms. Jayaraman, you have
indicated that eliminating the tip credit and the sub-minimum
wage would not reduce tips, and would not have an effect on
employment or business. Do you have research to show that?
Ms. Jayaraman. Absolutely. As I said, we just--we have
years of research showing that the seven states, compared to
the 43 states have the same or higher small business growth
rates, establishment growth rates, job growth rates, and
tipping averages.
We have a new report today showing that over the last
couple of years since the pandemic, the seven states have
actually outpaced the 43 states with higher establishment
growth rates, higher employment growth rates, and higher
overall incomes, including tips, compared to the 43 states with
the sub-minimum wage.
Since the pandemic we are seeing a gap between the seven
and the 43 grow, with the seven states providing a full minimum
wage doing better.
Mr. Scott. Thank you, and could you provide that research
for us?
Ms. Jayaraman. On the Record, yes.
Mr. Scott. Thank you. In eliminating the tipped credit, how
would that make life better for workers, rather than increasing
the--just increasing the minimum wage, eliminating the tipped
credit, what effect would that actually have on workers?
Ms. Jayaraman. Yes, so since we are seeing so much evidence
that the states that have a full minimum wage with tips on top,
are doing better, in terms of as I said, job growth,
establishment growth, we know that workers would have the
ability to grow in the industry.
Most importantly, they would have the stability, economic
stability that they are not allowed in the states that provide
a sub-minimum wage. In sub-minimum wage states, workers have to
rely on tips that fluctuate to get them to the base wage, or
higher.
That, as I said, changes day to day, month to month, week
to week, shift to shift. A breakfast shift, you get a lot less
in tips than a dinner shift. The instability of having to rely,
and the stress of having to not know what you are going to earn
when you go to work is the major difference.
Knowing what you are going to earn, and what you can count
on from your employer then gives you the confidence to reject
harassment, and that is why we are seeing that the seven states
with a full minimum wage with tips on top, have one half the
level of sexual harassment, as the states that have a sub-
minimum wage.
Why? Workers in those states tell us we can count on a wage
from our boss. We are not as reliant on customers to feed our
families, so we get tips, but we do not have to put up with
anything and everything from customers because we have that
base wage.
Mr. Scott. Now, you mentioned schemes that could result in
wage theft because of side work. Are there other schemes where
you could essentially steal the worker's tips?
Ms. Jayaraman. The biggest problem we hear from workers is,
as I said, they regularly work shifts where their tips do not
bring them to the full minimum wage, and the employer does not
make up the difference. That is one.
The second thing we hear a lot about is people who are not
supposed to be in the tip pool, whether they are managers, or
non-tip staff in the tip pool, reducing the amount of tips that
workers are receiving.
The third thing we hear is I am asked to do work that is
not tipped work, and I am paid a sub-minimum wage, and I do
want to point out Darden is the world's largest employer of
tipped worker--U.S. largest employer of tipped workers, world's
largest full service restaurant company.
A few years ago in their shareholder report, they actually
announced to shareholders that they would be trying to move to
have all their workers earn a sub-minimum wage, regardless of
what they do.
It is clear as long as there is a sub-minimum wage, there
is an incentive for employers to have workers do all kinds of
work. Whether it is side work, or it is cleaning bathrooms, or
it is back of house work, and try to be able to pay them the
sub-minimum wage. That is why we need protections for workers
who earn the sub-minimum wage that most of the time they are
tipped workers earning tips.
Mr. Scott. Well, if the protection would be if you get
caught you have a penalty, are the penalties sufficient?
Ms. Jayaraman. The penalties are non-existent, and most
employers end up fighting these kind of charges for years. By
the time that a worker may even see some kind of restitution of
their wages, it is years later. The amount of money has
generally very much decreased.
They are settling for something a lot less than what they
are owed, and so, no. Employers do not have any real incentive
to follow the law because they can delay payment for so long.
Mr. Scott. Thank you. Mr. Chairman, I have a unanimous
request that the democratic staff document called, A Slap on
the Wrist, How it Pays for Unscrupulous Employers to Take
Advantage of Workers, a document that was developed by the
democratic staff be entered into the record.
Chairman Kiley. Without objection.
[The information of Mr. Scott follows:]
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Chairman Kiley. The Chairwoman of the full Committee, Dr.
Foxx, is recognized for 5 minutes.
Mrs. Foxx. Thank you, Mr. Chairman, and I want to thank our
witnesses for being here today. Ms. Barron, critics of the tip
credit sometimes refer to it as a sub-minimum wage. Do you
believe it is a fair characteristic of the wages earned by
tipped workers?
Ms. Barron. No. I do not think it is a fair description of
that at all. I believe a tip credit is a tool. It is a mutually
beneficial, economic tool that is used to keep a restaurant
sustainable, to keep tipped workers making high above the
minimum wage, and keep back of the house workers making
competitive wages. That is what a tip credit it.
It is not a sub-minimum wage. It is an economic tool. I am
a restaurant worker. I do I know this and nobody else does?
Mrs. Foxx. Thank you. As someone who waited tables all
through high school and college, I worked hard for my tips, and
I was very glad to get them. Mr. Boucher, I understand you have
been both a restaurant worker, and a business owner in the
State of New Hampshire, where employers may utilize the tip
credit.
What are the benefits of being able to utilize the tip
credit, and what might it mean for your business if that option
were eliminated?
Mr. Boucher. First, it allows employees that are tipped to,
we actually phrase it this way. They are actually kind of
running their own business in their section, right? If you have
four tables, you have the ability to earn as much or as little
as you want, based on your service, based on how well you are
taking care of the guest.
By eliminating that, they may not be as incentivized to
work, as you have just indicated, as hard as you did. Second, I
have already said the economics of it would be devastating for
our company.
Mrs. Foxx. Well, thank you very much. Again, I have always
thought that being able to tip people was a sign of good
service, or not so good service, and as I see tipped workers as
entrepreneurs basically. They are able to really, really make a
difference to their customers.
Mr. DeCamp, the Fifth Circuit recently vacated the Biden-
Harris administration's 2021 tip regulations. This is the first
time a court has scrutinized the Labor Department Rule since
the Supreme Court overturned Chevron Deference. Can you explain
why the Fifth Circuit had concerns with the 80/20/30 standard
in the Biden-Harris Rule?
Mr. DeCamp. To put it very succinctly, the court concluded
that the Departments 80/20/30 regulation was not based on the
text of the statute. The statute defines tipped employees a
certain way, by reference to their occupation and their tips.
What the Department of Labor did was something completely
different.
They based it on the time sheet. They based it on tasks,
and what the court said was that Congress never authorized the
Department to micromanage the activity of restaurant work at
that level. It is simply a minimum wage statute.
Mrs. Foxx. Well, we have seen throughout the time of the
Biden-Harris administration that it overstepped its bounds all
of the time. It would like to be all three branches of
government. It fails often to administer the law, as we write
it here in Congress, and it is unfortunate we have to rely so
much on the courts to remind the administration that it is the
executive branch, and it is its role to administer the laws,
not make the laws.
Again, I want to thank all of our witnesses for being here
today, and shedding light on this very important subject, and I
thank you, Mr. Chairman. If you need my time, I yield it back
to you. If not, I yield.
Chairman Kiley. Thank you very much, Dr. Foxx. I will now
recognize myself for 5 minutes. Ms. Barron, you have worked as
a tip worker in Seattle in Washington State, where they
eliminated the tip credits. You have gotten something of a
preview of where this new rule from this administration would
take us.
In your experience would you say that your fellow tipped
workers, that they prefer the tip system?
Ms. Barron. Absolutely. They prefer tips over a flat wage.
Tips provide us the opportunity to maximize our income, and
make more than any employer is either willing, or can afford to
pay. Why would we not want to do that?
Chairman Kiley. Yes. Well said. You say in your testimony
here that with the elimination of the tip credit, workers like
myself have been subjected to surcharges, service changes, non-
transparent pay models, elimination of tip fines, elimination
of tipping. I mean for all the millions of tip workers across
America, with this new rule, do you think it would be fair to
say that they are coming after your tips?
The bureaucrats in Washington, DC. are coming after your
tips?
Ms. Barron. Absolutely, and I will give you an example, and
that is the Tip Pooling Rule. The one that Patty Murray changed
the Federal Labor Standards Act language that allows employers
to take our tips. If you want to talk about wage theft, the
opportunity to wage theft, to take our tips so that they can
pay back of the house workers, or non-tipped workers because
they cannot afford to pay the high wages.
They cannot afford to keep back of the house wages
competitive, so now we have in all the one fair wage states,
this Tip Pooling Rule, that allows the employers to take our
tips and pay non-tipped employees. That--it is ludicrous. We
are making a lot less money.
Chairman Kiley. Thank you very much. I think that is an
important takeaway from this hearing is that they are coming
after your tips. Bureaucrats in Washington, DC.
Ms. Jayaraman. Just like Trump did, right? During the Trump
administration.
Ms. Barron. Trump did not do that, Patty Murray did that.
Chairman Kiley. Excuse me, I was not speaking to you, Ms.
Jayaraman. Okay. Mr. Boucher, you are a restaurant owner, is
that correct?
Mr. Boucher. I am.
Chairman Kiley. You testified that you have actually seen
examples of restaurants closing down altogether because of the
elimination of tipping. Can you explain a little bit about the
cause and affect there?
Mr. Boucher. Sure. There were two restaurants in New
Hampshire. I will not name them right now, but they went to
that model where they paid their employees a flat wage, then
they had it on their menus that customers did not have to tip,
and that was reflected in their pricing of the menu.
It resulted in these employees--they did not last. One
restaurant, I think, closed in 6 months, and one did not even
last a year because these employees--think about it. Do you
want to work Saturday night for $15.00 an hour, or would you
rather work Monday lunch for $15.00 an hour?
What happened was these employees said you know what, I am
going to work $15.00 an hour at lunch for this restaurant. I am
going to get a tipped job at this other restaurant, and so they
eventually lost all their employees because they could make
more in a tipped wage environment.
Chairman Kiley. Yes. We have seen this in California with
the COVID shutdowns, and other very bad policies that caused
restaurants to shut down, and in that case, it hurts not just
the workers, but you know, you have families who save money to
go to their favorite restaurant once a month. It is not there
anymore.
You have couples who go there every year on their
anniversary. You have folks who their one night out a week,
they like to go to this place with their friends, suddenly it
is not there. I think that is another takeaway from this
hearing is that the bureaucrats in D.C. are coming after your
favorite restaurant.
Now, of course, I do not want to paint with too broad a
brush when it comes to folks at the Department of Labor,
because we have Mr. DeCamp here, who was the administrator of
the Wage and Hour Division and had a very different set of
priorities when he was there.
I think one of the things you mentioned in your testimony
is that surveys actually show overwhelmingly that workers
prefer the tip model, right?
Mr. DeCamp. Well, that is correct. I mean, I think
everybody would like to have their cake and eat it too, and
have a very high cash wage, and keep all their tips, but that
is not the reality. When faced with the practical reality of
either a cash wage plus--a sub-minimum wage plus tips, or a
higher flat wage, workers overwhelming want the opportunity to
get tips.
Chairman Kiley. Yes. It is like 90 percent, or something
like that?
Mr. DeCamp. 97 is the research I have seen.
Chairman Kiley. Yes. It is interesting, we saw similar
numbers with another policy that has been fiatted by the
Department of Labor, the Independent Contractor Rule, where
they want to force people out of the Independent Contractor
model, even though 90 percent prefer that model.
Now, they want to force people, take away their tips, even
though 90 percent say they prefer getting tips. What do you
think is going on here? I mean you were in charge of the Wage
and Hour Division there. There is new leadership now, and they
are consistently enacting policies without involving Congress
that specifically do exactly the opposite of what workers want.
What do you think is behind all this?
Mr. DeCamp. I think it is bureaucratic arrogance. Agencies
get used to the courts rubberstamping what they do. I think
that is going to change now that Chevron has been overruled,
and I think that agencies are going to be held more strictly
accountable to adhering to the laws that Congress enacts.
Chairman Kiley. Thanks very much. My time has expired, and
I will now recognize the Representative from Utah, Mr. Owens
for 5 minutes.
Mr. Owens. Thank you, so much. I appreciate it. Thank you
guys for being here. I want to start off with Ms. Jayaraman.
Ms. Jayaraman. Jayaraman.
Mr. Owens. Thank you so much, sorry about that. Okay. I
noticed the passion as you talked about the changes the Trump
administration made coming in. I guess my first question, I
looked at your background, very impressive, BA from University
of California, JD from Yale Law University.
How much time have you spent as a tip worker?
Ms. Jayaraman. I represent 300,000 workers.
Mr. Owens. No, no. I have been very specific.
Ms. Jayaraman. I myself, my family owned restaurants. I
worked----
Mr. Owens. No. That is not my question. How much have you
spent? How much time have you spent as a tip worker? You
personally?
Ms. Jayaraman. I have not been a tipped worker.
Mr. Owens. Okay, thank you. How much time have you spent as
an owner?
Ms. Jayaraman. I spent 10 years as an owner.
Mr. Owens. No, no, in other words----
Ms. Jayaraman. As a restaurant owner, I spent 10 years.
Mr. Owens. Your family or you?
Ms. Jayaraman. Me. Our organization had a restaurant.
Mr. Owens. All right. Organization or you? I am talking
about small business owner now. There is a difference in an
organization----
Ms. Jayaraman. I started an organization. Our organization
opened three restaurants.
Mr. Owens. Did you actually open them yourself, or your
organization opened it?
Ms. Jayaraman. As the President of the organization, I
opened the restaurants.
Mr. Owens. Okay. I think there is a difference in your
concept of ownership, and Mr. Boucher here.
Ms. Jayaraman. I do not think so, because I started them. I
hired people. I did all the same things that an employer did.
Mr. Owens. Okay. Well,----
Ms. Jayaraman. Yes.
Mr. Owens. I will say this because you are sitting next to
a tip worker, and it seems to be a disconnect to me. You are
very confident as you listen to somebody who is telling you you
are destroying her business. Can I ask you this? You are making
now, I am sure, a very past six-figure income, does your income
change when Cracker Barrel, Chili's, Applebee's, My Pizza, Red
Lobster, TGI, these are all the companies who have left
California because of the Tip Law.
There are 10,000 people who have lost their jobs since
September through January because of this mandatory Tip Law.
Does your income change if you get it wrong?
Ms. Jayaraman. That does not make any sense because
California has had a full minimum wage with tips on top for
over 50 years, so it does not make sense for businesses to have
left in the last couple of months.
Mr. Owens. I reclaim my time. I reclaim my time.
Ms. Jayaraman. It does not have anything to do with that.
Mr. Owens. Well, it does.
Ms. Jayaraman. Yes.
Mr. Owens. A $20.00 minimum wage----
Ms. Jayaraman. That is not what we are talking about today.
Mr. Owens [continuing]. Let me just finish. The direct
impact of a $20.00 minimum wage has been these companies
leaving California, the ones you just highlighted as being such
a great place to be. 10,000 people have lost their jobs. How
many of those 10,000, because of a $20.00 minimum wage because
bureaucrats have decided how this industry should work.
Ms. Jayaraman. None of those jobs or businesses are tipped
workers or tipped employees. If you look at Denny's, which is a
very large employer of tipped workers, the CFO of Denny's----
Mr. Owens. I want to reclaim my time. I want to reclaim my
time please.
Ms. Jayaraman [continuing]. Has indicated that Denny's is
growing faster in California, than in any State in the United
States because they pay their people a full minimum wage.
Mr. Owens. Just because you say so does not mean it is so,
okay. Now, I played NFL for 10 years. Have you ever played in
NFL by the way?
Ms. Jayaraman. Have I ever played in the NFL? No. I have
not.
Mr. Owens. Okay.
Ms. Jayaraman. Probably because of sexism.
Mr. Owens. What would you say if you are given a position
to make rules in the NFL that you never had to live by? Would
that be--are you going to give yourself a good name, or give
yourself a title, good income. Would we take you seriously if
we were to talk about rules and changes in the NFL if you never
had experience in that area? The answer is no.
Ms. Jayaraman. Sir, I have been working with restaurant
workers for the last 30 years.
Mr. Owens. Well, you are sitting next to----
Ms. Jayaraman. Hundreds of thousands of restaurant workers.
Mr. Owens. You are sitting next to restaurant people right
now.
Ms. Jayaraman. Yes. Restaurant workers, like all people,
can have differences of opinions. The overwhelming majority of
workers in this industry say we need a raise. We are not paid
enough because as I said, I would challenge any of you to live
on $2.00. I would challenge Ms. Barron to live on $2.00 right
now; to leave Seattle and to go work for $2.00 right now.
Mr. Owens. Let me--I am sorry, I would like to take back
the time please. I would like to--OK. Well, you know what, the
good thing about--I would like to reclaim my time, please. The
great thing about this great country is choice. Instead of
saying--we have people like the young lady here, who can leave
and go to another industry, you know that, right?
Ms. Jayaraman. Or, go to another State, yes, absolutely.
Mr. Owens. Well, they are leaving California, so obviously
it is not working there. They are leaving Seattle because it is
not working there.
Ms. Jayaraman. Actually, California has the largest and
fastest growing restaurant industry in the country.
Mr. Owens. The sad part of this conversation is
bureaucrats. Arrogant bureaucrats, who sit there and make these
rules, and you are sitting next to someone who has been
impacted. Ten years, 10 years in this industry, and she is
telling you----
Ms. Jayaraman. Well, the worst rule was the Trump
administration trying to make tips the property of owners,
rather than workers.
Mr. Owens. She is telling you why. She is telling you what
she is trying to do, what is happening to her family, and you
are sitting there with that smile on your face because it does
not matter to you. You are going to make your income no matter
what. The problem is we have too many--we have too many
bureaucrats who sit there with expertise, and just run out--
California is being destroyed by the way because of these kinds
of rules.
Ms. Jayaraman. No. California has the largest and fastest
growing restaurant industry in the United States according to
the CFO of Denny's.
Mr. Owens. That is why we are leaving California signs all
over the place because of the great things they are doing
there.
Ms. Jayaraman. All the chains have grown faster in
California, than any State in the U.S., according to the CFO of
Denny's.
Mr. Owens. Do me a favor. Keep it in California then, thank
you so much. I yield back my time.
Chairman Kiley. I want to thank our witnesses for their
testimony, and I now recognize the Ranking Member for a closing
statement.
Ms. Adams. Thank you, Mr. Chairman. I want to thank the
witnesses as well, but you know, Congress is a good example of
the fact that we make rules, and sometimes we do not know a lot
about what people are going through, so you know, maybe we are
in that sense, we do not know what we do not know as well.
I do appreciate what has been said here today. The current
sub-minimum wage with tipped employees perpetuates low pay,
enables, inexcusable levels of wage theft, and it leads to
higher poverty rates. Despite some high earning expectations,
most tipped workers face income insecurity, and limited or no
access to benefits.
The Trump administration's attempt to gut protections for
tipped workers have only worsened these issues by allowing
employers to steal almost 6 billion dollars of worker's hard-
earned tips for themselves each year. Luckily, in 2021, the
Biden-Harris administration withdrew the Trump administration's
extreme attack on tipped workers by ensuring workers, not their
bosses, get worker's tips.
It is abundantly clear that there are two agendas present
today. The republican's agenda will weaken worker protections
and let low road employers off the hook for breaking the law.
While the democratic agenda is focused on uplifting workers by
advancing legislation like the Raise the Wage Act, and the
Let's Protect Workers Act, which will secure fair wages, close
loopholes, and hold dishonest employers accountable.
Let us work together to build a system that supports all
workers and addresses these pressing issues. I thank the
witnesses very much for being here today, for your testimony.
Mr. Chairman, I yield back.
Chairman Kiley. Thank you very much. I think this hearing
has brought to light some important implications of the current
policy, well, the policy that is no longer in effect because it
was struck down by a court, but clearly the direction that this
administration wants to take us.
That for millions of Americans, who rely on tips, who are
proud of the tips they earn, who appreciate the opportunity to
earn tips, and depend on them for their livelihood, you have a
Department of Labor in this Biden Harris administration, under
the direction of unconfirmed Acting Secretary Julie Su, that is
coming after your tips, simply by issuing regulations.
I think that is a very alarming thing, and the contrast
could not be clearer because we have legislation right now in
Congress that would actually say you get to keep your tips
entirely, no taxes on tips. The contrast could not be clearer
between that and saying we do not want you to have any tips at
all.
Then we also saw that for the folks who run restaurants,
this could be a very challenging industry, especially in recent
years. This is really a threat to the viability of a lot of
restaurants, and so they are coming after your favorite
restaurant as well.
Coming from California, we have seen something of a preview
of this set of policies, after all, the current Acting
Secretary, Ms. Su, was the Department of Labor head in
California, and under her leadership in the Newsom
administration, California for most of her tenure had the
highest unemployment rate in the entire country.
We had the slowest level of wage growth. Absolutely last
out of the 50 states. We also had the highest poverty rate in
the United States. Her record there was so bad that even a
majority of her own party in the Senate refused to confirm her.
Now, that was no matter to the Biden administration.
They have decided to keep her there without a vote,
shattering all records for an unconfirmed Acting Secretary
remaining in office. The Vice President, Kamala Harris, even
went so far as to say ``I'm not going to call her Acting.''
Even though the Senate refused to confirm her, Vice President
Harris, sitting Vice President of the United States, basically
shoves the Constitution aside and says I am not going to call
her Acting.
She has remained there and has continued to promulgate
these anti-worker policies. I think that the common thread as
we discussed, between this and say the Independent Contractor
Rule, is these rules by force run directly against the wishes
of workers.
90 percent prefer the tip model. Similar numbers of
independent contractors prefer to be independent contractors,
and yet they want to issue orders without so much as a vote of
Congress that say we are going to take away your tips, we are
going to take away your right to earn a living on your own
terms.
Fortunately, under the leadership of Dr. Foxx, this
Committee, Education and the Workforce, is fighting back
against these overreaching regulations. We just had a good
court ruling on the Tipping Rule, the Independent Contractor
Rule is being challenged in court as well, and we will continue
to fight to protect workers and small businesses.
With that, and seeing without objection, there being no
further business, the Subcommittee stands adjourned.
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[Whereupon, at 11:18 a.m., the Subcommittee was adjourned.]
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