ROC United RI – RI Future

June 15, 2015June 16, 2015

RI Hospitality Assoc meets in chain restaurant guilty of $500,000 in wage theft

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A meeting of the Rhode Island Hospitality Association (RIHA) at the restaurant Not Your Average Joe’s in Warwick means that RIHA President Bob Bacon, owner of the Gregg’s Restaurant chain, can no longer claim that, “Thirty-five years plus in the industry, I’ve never encountered [tip and wage theft].”

Not Your Average Joe’s in Massachusetts was found to have failed to pay employees hundreds of thousands of dollars across 15 restaurants in 2012 by the United States Department of Labor. Not Your Average Joe’s owed workers over half a million dollars.

Bacon, speaking before the RI House Committee on Labor, added, “I’m not naive enough to say that it doesn’t exist. I can tell you that it doesn’t exist on the level that’s being portrayed here tonight. I can say that without any reservation.”

This is belied by a statement from George A. Rioux, the Labor Department’s district director in Boston, whose investigation found such theft and fraud at 34 Boston area restaurants. “We were surprised by the results,” said Rioux, “This is substantial. We’re not getting the change in behavior we want. Companies are paying back wages and agreeing to compliance, and it’s not enough to finally wake up and see that we’re serious.”

Bacon was speaking against House Bill 5363 that, if passed, would make it easier for workers to take action to recover money lost through wage theft, a multibillion dollar crime in the United States. Bacon suggested that the restaurant industry was fully capable of policing themselves.

…if one of these people that says they have all these problems, if they want to come to us, I’ve offered for three years in a row to do the following: First, we’ll keep the employees name confidential. Second, we’ll meet with the employer and we’ll bring the complaint to their attention, third, we’ll work to educate that employer on the U.S. Department of Labor’s rules and regulations on the matter, and fourth, probably most important, in the event that an employer chooses to stay out of compliance with an issue, we would assist the employee in going through the appropriate channels to get the situation rectified.”

It is the height of absurdity to believe that the same organization that feels it is proper to hold meetings in restaurants that have been found to have engaged in wage theft can be counted on to deal fairly with employees claiming wage theft or other forms of worker abuse.

RIHA communications director Monika Nair did not respond to an inquiry regarding the purpose of the meeting at Not Your Average Joe’s in Warwick, but the timing of the event, ahead of a final, two week flurry of legislative activity in the General Assembly, seems more than coincidental.

Shortly after sending my inquiry to Nair, Sarah Bratko, manager of governmental affairs for RIHA, started following me on Twitter. A second inquiry to Bratko has also gone unanswered as of this writing.

At the same time RIHA is meeting, ROC United RI and the One Fair Wage Coalition are having an Industry Night from 6-9pm at E&O Tap, 289 Knight St in Providence.

May 19, 2015

A rebuttal to ProJo’s editorial on under-paying tipped workers

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Recently the Providence Journal published a piece panning the proposed legislation to raise the minimum wage for tipped employees, over time, to reflect the standard minimum wage for non gratuity-based wage earners.

Perhaps informing the public is no longer the point? These days, readers and residents can easily see through the truth-bending, mean-spirited talking points of the Providence Journal’s editorial section. The change in editorial tenor seems driven not by shrinking staff but rather by a unflinching desire to align with business and corporate interests.

Then again, maybe informing the public with informed opinion was never the point.

A friend recently told me about the editorial offices of the ProJo, in which are displayed the evidence of the newspaper’s record of having been on the wrong side of public opinion since shortly after dinosaurs made their final appearance on our earth. Even under their newest ownership, the newspaper’s editorial section retains consistency in choosing the wrong side of the debate. Here is why.

Though Rhode Island’s economy has shown some slight improvement, it remains sluggish. In this environment, the General Assembly should be encouraging growth, rather than making it more difficult for job-creating small businesses, including the state’s famous restaurants, to stay alive.

That is why the Assembly should reject a proposal, backed by a national lobbying effort, to massively increase the minimum wage for those who receive tips.

Decades of economic trial and error should have, by now, taught anyone and everyone who claims to have an interest in encouraging growth for more than just his or her own bank account, that economic growth requires an expansion of, not just small business, but also consumer purchasing power. In a business landscape reliant on discretionary expenditure, such as the restaurant industry, increasing the non-essential spending power of the workforce that helped to make the state’s restaurants “famous,” would be taking a page from Henry Ford’s book by allowing the workforce responsible for helping to produce a profitable product the financial empowerment to afford the product they help produce. Translation: if you want to know what actually trickles down, ask a plumber. I guarantee she will not say prosperity.

Additionally, the national lobbying effort has done very little to earn the support of the vast majority of Rhode Islanders polled as to whether or not they believe gratuity based employees should be paid more than $2.89 an hour by their employers. That support was earned by virtue of common sense.

Currently, the minimum wage for such workers is $2.89 an hour. Those seeking a change note the wage has not gone up a cent since 1996, and they argue for the wage to be brought up by 2020 to the level of the state’s minimum wage, currently $9.

What they leave out is that that $2.89 is not really the worker’s wage. Under state law, tips must make up at least the difference between that number and $9, or the employer must kick in the difference. Rhode Island follows the example of most states and the Internal Revenue Service in considering tips to be earned income.

As elusive as the Holy Grail, it appears we have found the one thing on which the business community and the IRS agree. Gratuities are earned income. But they are not paid by the employer. Therefore, if the majority of income earned by tipped restaurant employees is not paid by the employer, this appears to be skirting wage and hour laws pertaining to classification of employees.

Let us call gratuity based employment what it actually is: a sales job with profit based on voluntary commission. Normally, in a commission-based industry, commission is a contractually negotiated percentage of the sale of a good or service, paid by the employer or contractor. However, in the employment world of gratuities, that commission is paid directly by the consumer. Furthermore, it is voluntary and subject to the fancy of the consumer.

In most cases, the tips, keyed to rising prices, come through. According to Census data, Rhode Island’s tipped employees report they receive $12.12 an hour, 35 percent more than the minimum wage. And they may make more than they report. Research from the National Restaurant Association, a business lobby group, shows that, on average, tipped employees make between $16 and $22 per hour — well beyond Rhode Island’s current minimum wage.

Consider the source and the reference bias that comes with accepting a report from a business lobby group called the National Restaurant Association, while rejecting evidence by a national lobby for working people. Furthermore, after making the statement that employers must “kick in the difference” between the minimum wage and the actual earnings of the employee, the opinion writer then offers up the accusation that Rhode Island’s tipped employees are under-reporting their earnings by upward of ten dollars an hour.

The argument of the employer investing only $2.89 per hour because of an unsubstantiated claim of tax evasion by an undisclosed percentage of gratuity based restaurant staff while blindly assuming that all restaurants are complying with the regulation to compensate the difference between what they pay and the minimum wage is, at best, an abstract justification. At worst, it is a call for further regulation.

That is why most servers, asked whether they would prefer a $2.89 per hour minimum wage with tips or a flat $15 per hour wage, would go for the tips, says Dale Venturini, president and CEO of the business-funded Rhode Island Hospitality Association.

Most servers could very well mean six out of ten servers chosen, not at random, by “the business-funded Rhode Island Hospitality Association.” It could mean that forty-nine out of one-hundred servers refused to answer a question asked by counsel for representatives of an organization comprised of the owners of the restaurants for which the servers work. It is hardly compelling evidence to substantiate such a statement.

We are sympathetic with the struggle of unskilled workers to earn a living these days. According to an organization pitching a higher minimum wage called the Restaurant Opportunities Center of Rhode Island, some are not able to lift themselves out of poverty through such work. Tipped workers in the state, the center reports, receive about $638,000 in food stamps every month.

But would they be better off without jobs?

No. They would be better off without a condescending and thinly-veiled threat. They would be better off with an acknowledgement that what they do is a skill. They would be better off in an industry that does not boast one of the highest turnover rates. They would be better off exercising their right to organize and demonstrate by walking out, mid-shift on a Friday night rush because, while they are offered the opportunity to earn money for selling the restaurant’s dining experience to patrons, it is the patrons and not the restaurant that are investing the vast majority of the money to insure prompt service. To Insure Prompt Service = TIPS. Would they be better off without jobs? If someone pees on your shoe, should you appreciate that he or she did not stab you in the neck?

Many restaurants operate on very thin margins, and many go out of business. Tripling the cost of labor in five years would have the obvious effect of making it much more expensive to run a restaurant. Since businesses with small margins cannot afford to see profits shrink, they would have to respond by slashing costs (the quality of food and/or service) and/or by raising prices. Such changes would make people less likely to eat out, driving restaurants out of business.

I worked in the restaurant industry for 13 years. I was a front of the house, service-staff employee in every capacity. I was a server, a busser, a bartender, a bar back, a host, and a manager. The reason I left the industry was because there was no consistency of income. As a manager, I knew that I could over-schedule my waitstaff and “flood the floor” with servers in order to ensure potentially busy shifts would never result in the unlikely, but possible, event of getting slammed with too many guests at once.

Eighty to ninety percent of the time, that kind of rush did not happen. The restaurant would fill. But rarely would it be the maelstrom for which I over-prepared. Servers would have to “turn and burn” tables in small sections in order to make enough to make the aggravation worthwhile. Understandably frustrated servers would often give poor service and, as manager, I would take a dose of attitude from servers. But, at $2.89 per hour, it cost the restaurant very little to flood the floor.

Costs are going to rise and fall with the prices and availability of corn, gas, water, tomatoes, taxes, milk, bread, or window cleaner. Restaurants are still going to purchase these items. If a french restaurant encounters a hike in butter prices, they are not going to switch to canola oil. They probably will not go out of business. The restaurant will pay for butter because French cooking needs butter.

Restaurants should value investing in their ambassadors to the public as one of their most vital ingredients. After all, what a restaurant really sells is service. The opinion expressed in the Providence Journal editorial is one of antiquated greed and should be placed on the wall of the editorial office at the Providence Journal with the impressive collection of evidence of having opined on the wrong side of public opinion.

April 9, 2015April 15, 2015

Business owner: Restaurants can absorb reasonable tipped minimum wage increase

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Rhode Islanders who want to see both the regular and tipped minimum wage increased by the General Assembly this year should take note of those businesses and business associations that oppose raising the wage and consider spending their money at businesses that truly have the best interests of their employees at heart. It’s all too easy for business owners to say, “I love my employees.” It is harder and more significant for business owners to truly advocate for the economic well being of their employees.

Deborah Norman has owned and operated restaurants in Rhode Island for over 38 years. Currently she owns Rue De L’Espoir on Hope St. and Rue Bis on South St., both in Providence. She has 30 employees between the two restaurants. Norman spoke before the Senate Committee on Labor in support of increasing the tipped minimum wage, an effort opposed by the Rhode Island Hospitality Association and other business lobbying groups.

“While I can only speak for myself and my two restaurants,” said Norman, “it’s difficult for me to imagine that my experience is so abnormal as to be incomparable to that of many other restaurants in our state.”

“An increase in the sub-minimum wage would benefit women, men, families and the economy as a whole,” said Norman, “I wanted to reach out personally as a restaurant owner and explain why I am confident that my restaurants could absorb a reasonable rate increase without a negative impact to my business.”

Norman agreed that an increase done too quickly and too steeply might have disastrous effects, but an “incremental but significant change” could be dealt with. “For example, if Rhode Island were to raise the tipped minimum wage by $1 per year, for three consecutive years… my restaurants would have no problem adapting.” Norman did not think the slight price increase and minor menu “tweaking” she would do to accommodate the change would be noticed by her customers.

“In my opinion,” said Norman, “the biggest difference would be that 20,000 workers in our state would have more money in their pockets, putting them in a better position to actually come out and eat in the restaurants they may even work in.”

“By legally raising the tipped minimum wage across the board, no single business would have to worry about being at a competitive disadvantage.” This is significant, said Norman, because she already pays many of her workers at rates above the tipped minimum wage. She does this because she wants to be fair to her employees, but it puts her restaurant at a competitive disadvantage “because I know that competing restaurants might not act similarly. Raising the sub minimum wage would provide an even playing field.”

April 9, 2015April 15, 2015

Tip high and tip often, someone’s economic security depends on it

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There are two minimum wages in this state, as in many states. There’s the one you always hear about that applies to almost everyone and every job, which is around $9.00/hr. right now. Then there is the other one, for the people who didn’t have a strong-enough lobby when the minimum wage bill was first written and subsequently modified. They are mainly restaurant servers – waitresses and waiters. Their minimum wage is currently $2.89/hr. in RI. Hence, it is referred to as the sub-minimum wage, or as I like to call it the substandard minimum wage.

Legislation heard last night would raise the sub-minimum wage to be equal the minimum wage over four years, so that in 2020 the sub-minimum wage would effectively be eliminated for servers.

Some of the Big Issues

How does one live on $2.89/hr.? They don’t. The idea is that tips make up the difference between $2.89 and $9.00, and current law in fact states that owners must add to servers’ income whatever is necessary to bring $2.89+tips up to $9.00. For that matter, how does anyone live on $9.00/hr.? Again, they don’t. That’s way below the poverty line. But that’s another story.

Note that tips are supposed to reward good work, above and beyond what is required of the server. At least, that was the original intent, but now they are formally part of ‘regular’ wages. I’ll bet most patrons do not know that. I didn’t.

Does anyone else see a problem with this? Like, what about all of the slow nights when there are hardly any tips? Even including the good nights the typical server’s income is nothing to write home about.

Many numbers for the actual average server wage, including tips, were tossed around last night. About $8.50/hr. seems to be the most believable. But wait: weren’t servers guaranteed to get $9.00/hr.? Unfortunately some wage theft and other unscrupulous practices occur in some restaurants. But, again, I digress.

Another problem: in order to get decent tips, a server has to suck up to her patrons. The servers that look the best, smiles the most, and doesn’t complain, make the most. If you don’t want to fit this picture, tough. Like it or get another job. Several restaurant owners at the hearing actually said things like this.

There is a LOT more to this, which others have or will addressed.

Observations on Dubious Observations

1) One of the senators on the committee hearing the bill asked: If there are thousand(s) of servers in RI, and they support the bill, why aren’t they all here testifying tonight?

Comment: (We ignore the ludicrousness of this question in the first place.) As a testifier pointed out, most servers have to be at work by 4 PM (that was about when the hearing started). But OK, putting that to one side, by the same reasoning, there are hundreds of restaurant owners in RI, why weren’t all of them there last night? After all, they don’t have to start at 4 PM, the servers (and others) are handling the work at their restaurants.

2) Many of the owners took personal offense at the testimony of the supporters of the bill. Many talked of their staff and themselves as “family.” I have no doubt that the vast majority of the owners in that room are sincere, good people with good intentions. I told a couple of them that. They are also small-business owners, and they do have a tough life. My father was self-employed, I know.

Comment: But there are many owners out there who are not good people, and the state needs to protect all workers.

3) Many of the owners testified that their servers like the status quo. The owners know this because they asked their servers about it directly.

Comment: Anyone NOT see a problem with this? If your boss thinks that A is better than B, and (his) money is involved, and asks you, his worker, if you think the same, and you don’t want to risk losing your job or making less, and you do want to feed your family, and you don’t have a contract or tenure and are not married to the owner’s sister, what are you going to tell him?

4) One of the owners told me that he didn’t think that sexual harassment had anything to do with the bill and, implicitly, should not have been brought up by the bill’s supporters.

Comment: Sexual harassment by the patrons is one of the things servers have to put up with to get decent tips. Unfortunately, it doesn’t stop there, but many servers also have to put up with it from their bosses or managers. If a server resists or complains, the offending party can assign her to the low-tipping work in the restaurant, like assigning her to a small section (fewer tables, etc.).

That’s It

Remember: tip high, tip often.

March 27, 2015April 14, 2015

ProJo misleads public on Employment Policies Institute

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Michael Saltsman lays out some specious reasoning and faulty arguments for why restaurant owners should be able to legally pay servers less than the minimum wage. That’s fine, as a public relations professional employed to advocate against low wage workers, that’s his job.

The Providence Journal, on the other hand, failed at its job and committed a journalistic sin by obfuscating the real origins of the op/ed. An editor’s note following the piece labels Saltsman as the “research director at the Employment Policies Institute, which receives support from businesses, foundations and individuals.”

In truth, the Employment Policies Institute is a front for a public relations firm funded by the restaurant industry and affluent conservatives to astroturf against low wage workers.

The New York Times last year profiled the Employment Policies Institute in an article titled “Fight Over Minimum Wage Illustrates Web of Industry Lies.” Here’s the first two paragraphs of that story:

WASHINGTON — Just four blocks from the White House is the headquarters of the Employment Policies Institute, a widely quoted economic research center whose academic reports have repeatedly warned that increasing the minimum wage could be harmful, increasing poverty and unemployment.

But something fundamental goes unsaid in the institute’s reports: The nonprofit group is run by a public relations firm that also represents the restaurant industry, as part of a tightly coordinated effort to defeat the minimum wage increase that the White House and Democrats in Congress have pushed for.

It goes on to explain how the Employment Policies Institute actually has no employees and was started by a pr pro who advocates for fast food and other corporate clients.

The Employment Policies Institute, founded two decades ago, is led by the advertising and public relations executive Richard B. Berman, who has made millions of dollars in Washington by taking up the causes of corporate America. He has repeatedly created official-sounding nonprofit groups like the Center for Consumer Freedom that have challenged limits like the ban on indoor smoking and the push to restrict calorie counts in fast foods.

In 2012, according to the New York Times, the Employment Policies Institute listed on its tax return just 11 donors, some of whom gave as much as $500,000. Most of that money either pays Berman’s pr company or purchases advertising beneficial to its clients. The website BermanExposed.org says Saltzman is an employee of Berman’s pr firm.

The Times writes the Employment Policies Institute is a “critical element in the lobbying campaign against the increase in the minimum wage, as restaurant industry groups, in their own statements and news releases, often cite the institute’s reports, creating the Washington echo chamber effect that is so coveted by industry lobbyists.”

Such astroturfing from powerful corporate special interests has become all too common in politics. Conservatives know the American people are opposed to their hope of keeping working class people in poverty, so they gin up voodoo economics to obfuscate the facts. The Providence Journal, on the other hand, should be in the business of educating not obfuscating and it committed a journalistic sin when it misrepresented Saltsman’s op/ed as unbiased economics.

March 24, 2015March 26, 2015

John Henry vs. robots in Rhode Island restaurants

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At recent State House hearings on raising the minimum wage and eliminating the tipped minimum wage, restaurant owners, beginning with Bob Bacon of Gregg’s Restaurants, (who is also the president of RIHA, the Rhode Island Hospitality Association) have repeatedly brought up the specter of automation replacing low wage workers if labor costs are raised. Raising the wage, say entrepreneurs, will price minimum wage workers out of the market, and these robots are being developed now.

Following this argument to its inevitable conclusion, workers should realize that unless they are prepared to always sell their labor at rates below the price of a robot, they will be unemployable. As the price of such technology falls, workers should expect to have their wages slashed accordingly. It’s not just workers in restaurants who will be replaced, but taxi cab drivers, long haul truckers and soldiers. According to NBC News, even skilled workers like pharmacists and supposedly skilled workers like writers may find themselves displaced. In fact, one study estimates that 47% of jobs are at risk of being lost to robots.

I suppose that in the face of this threat we could fight for our jobs, selling our labor ever cheaper, exhausting ourselves in John Henry-like feats of frenzied work that demonstrate our indefatigable spirit even as our hearts explode in glorious exertion…

Or we can flip the script.

Whenever a new robot is developed, the owner simply lays off a bunch of workers, presses the “on” button and relaxes as the profits roll in. This allows the entrepreneur to enjoy a steady stream of income as the unemployed workers struggle to survive.

As more and more robots come online, less and less people will be employed. Eventually, even skilled robot mechanics will lose their jobs as robots will be able to repair each other. The humans of this world will be divided into those who own the robots and those who are starving to death. I think this is what Paul Krugman meant by “uncomfortable implications” when he discussed the future of robotics.

The problem with this scenario should be obvious. As this transition to the robo-centric world of tomorrow develops, there will be less and less people able to afford to buy the many things the robots are making. Long before we get to the point where the 1% of the 1% own the entire world and an army of robots to do their bidding, the economy will have collapsed.

No one will be able to afford to eat at Gregg’s.

So what’s the answer? Robert Reich suggests that it “may be that a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us becomes the only means of making the future economy work.”

We already subsidize the restaurant industry with our taxes. Mike Araujo of ROC United RI says that “tipped workers in Rhode Island currently receive $638,325 in food stamps every month.” That’s because the wages the restaurants pay to these workers are too low, and as more workers are replaced by robots and become unemployed, we’ll need to expand our social safety net. To do that we’ll have to tax the owners of the robots.

In light of this logic, our best bet is to get on with this now. We need a progressive income tax structure to increase taxes on the top earners in our state. We need to strengthen and increase, not eliminate, the estate tax. We need to tax capital gains and we need a transaction tax on all stock trades. I’m sure there’s a lot more good tax policy ideas I’m missing, but for the problem of robots and automation in particular, we need a robot tax.

In the future predicted by the leaders of the Rhode Island Hospitality Association, there will be fewer and fewer people able to pay taxes or in any way participate in the economic system of our state. Robots, however, will be productive and very taxable. Instead of allowing a system where workers strive ever harder for less, we need to impose an automation tax on industries that replace workers with robots.

March 23, 2015

Tipped minimum wage increase debated at the State House

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A large coalition to raise the tipped minimum wage was launched at the State House with a press conference and public testimony on House Bill 5364. Representative Aaron Regunberg introduced the bill that would gradually increase the the minimum wage from $2.89 to match the regular minimum wage by 2020. Senator Gayle Goldin introduced matching legislation on the Senate side. There has been no increase in the tipped minimum wage in nearly 20 years.

ROC United RI (Restaurant Opportunities Center) launched “One Fair Wage Rhode Island,” an impressive coalition of community, labor, faith business and women’s organizations that includes the Women’s Fund of Rhode Island, RI-NOW, NAACP-Providence Branch, Farm Fresh Rhode Island, the Economic Progress Institute, the Bell Street Chapel, Rhode Island AFL-CIO, the Coalition of Labor Union Women, Rhode Island Jobs with Justice, Fuerza Laboral, NEARI, United Service and Allied Workers of Rhode Island, Planned Parenthood of Southern New England and Unite Here Local 217.

Many restaurant patrons are unaware that their tip is not simply a “thank you” for great service, said Senator Goldin, “It’s paying your server’s base salary, and nobody’s base salary should entirely depend on a customer’s mood.”

More than just being an issue of fairness, this is an issue of impacting “women’s economic security,” says Women’s Fund Executive Director Jenn Steinfeld. “Nearly three in four Rhode Island tipped workers are women, one-third are mothers, and more than half of these are single mothers.” Steinfeld says that eliminating the tipped minimum wage will “help address the gender pay gap.”

Being dependent on tips for their salary makes servers more vulnerable to sexual harassment, since telling a customer that their advances or flirting is unwelcome puts the server at risk of losing a tip. A recent report from the national ROC United found that, “Women living off tips in states with a $2.13 an hour tipped minimum wage are twice as likely to experience sexually harassment than women in states that pay the full minimum wage to all workers. In fact, all workers in $2.13 states, including men, reported higher rates of sexual harassment, indicating that the sub-minimum wage perpetuates a culture of sexual harassment.” It’s in response to this atmosphere of sexual harassment that ROC United has launched its “Not on the Menu” campaign.

There is also good economic sense in raising the tipped minimum wage, maintains Mike Araujo, of ROC United RI. “”Raising the subminimum wage will have an important stimulative effect for Rhode Island. When tipped workers earn more, that money goes right back into the local economy.” ROC United estimates raising the wage will pump $64 million into the state’s economy. Further, tipped workers in Rhode Island currently receive $638,325 in food stamps every month, which means that taxpayers are effectively subsidizing the restaurant industry through social welfare programs.

After the press conference there was a heaing on Regunberg’s bill in the House Labor Committee. Though over 150 people signed up to testify, on both sides of the issue, in the end only 25 people could endure the four hour hearing waiting for their turn to speak. Those speaking against raising the tipped minimum wage were mostly members of the Rhode Island Hospitality Association (RIHA), a business lobbying group that routinely opposes any legislation that might raise the minimum wage or improve the ability of workers to collect money lost to wage theft. Many of the RIHA members wore small golden pineapple pins.

“The states that have eliminated completely their subminimum wage,” said Representative Regunberg describing the economic impact of his bill, “have as high or higher industry and job growth rates as subminimum wage states.”

Bill Kitsilis, of Angelo’s Palace Pizza sees no reason to raise the tipped minimum wage, and said, “My tipped employees… are some of the highest paid employees in my business.” He thinks $2.89 is fine, since that’s what he predicated his business model on. Comparisons with other states are not valid, Kitsilis maintains, because other states have much, much stronger economies.

Representative Antonio Giarrusso asked about employee turnover. Kitsilis feels that turnover only happens when people aren’t making money, and he also says that there are a lot of people hiring right now, making it difficult to find workers. An odd statement, considering Rhode Island’s unemployment rate.

The issue of “side work” came up, that is, the work servers do for a restaurant, at $2.89 an hour, that doesn’t earn the server tips. Side work is an old way of getting work done in a restaurant on the cheap, and is completely legal. Raising the subminimum would eliminate this disparity. Kitsilis said that such work “tends to be… a small percentage of what they do, most of the time…”

Representative Teresa Tanzi has worked in the restaurant industry for 14 years. “In those 14 years I have worked at dozens of restaurants, somewhere around 45 restaurants, I would say. And in all those restaurants, one has paid me according to the law.” For fear of retaliation, she could never confront management about this. “I’m well aware that they are breaking the law, but there is nothing I can do. I am relying on my manager and the owner of that restaurant for my employment.”

The Department of Labor surveyed 9000 restaurants over two years and found that 84 percent of them violate the law.

When Chairperson Joseph Shekarchi pushed back against Tanzi’s experience, saying that he doesn’t see the connection between low wages and harassment and abuse of servers, drawing on his experience as a bartender, Tanzi stuck to her guns and pointed out that the experience of women working as servers and men working as bartenders are very different. “It does happen and it’s a daily occurrence. If someone touches you, or if you’re waiting on a table and it’s a party of ten and that’s all the money you’re going to make tonight, and they want to be fresh with you in some way shape or form… I refer to it as a ‘golf clap’ in my vernacular. Whenever someone says something that’s ‘funny,’ you’re waiting on someone and they something that isn’t funny, you have to laugh. If someone touches you inappropriately, what are you going to say? There’s very little recourse as a server that you have.”

Rep Giarrusso’s solution for “any woman or anybody getting sexually harassed” is that “they should hit somebody with a nine iron.” Maybe he’ll introduce legislation to that effect.

“The truth is, 60 percent of restaurant workers in Rhode Island are over the age of 24 and 32 percent of all of Rhode Island’s restaurant workers are parents.”

“I feel that the current wage devalues me as an employee,” says Daniel Burke. Burke explained how the days and hours he is making good money from tips are averaged with the days and hours he’s performing other tasks at the restaurant. As long as he averages minimum wage with the money provided by customers, the restaurant can get away with paying him $2.89 an hour. Of course, Representative Giarusso thinks that Burke should take this issue up with his employer because, “I would, that’s for sure.”

As a 31 year old mother explains that her bartender job requires her to perform duties that are not directly related to serving customers. Therefore no tips can be expected and the restaurant gets away with paying employees $2.89 an hour for work that any other business in the state would have to pay at least minimum wage to accomplish. Again, Representative Giarrusso misses the point, thinking that the issue of side work isn’t related to this. As long as there is a two-tiered wage system, restaurant managers and owners will have an incentive to make workers do untipped work at the lower wage, rather than pay the server properly.

ROC United RI’s Mike Araujo finally explains that “those extra tasks,” that is side work, are “built into the job.” Side work, prep and cleaning averages out to about 3 or 4 hours a day, which is “effectively unpaid labor.” This profitable industry is built on the backs of primarily underpaid women.

Araujo may have summed up the night best when he said, “This issue speaks to how we believe society should be shaped. Do we believe that our citizens deserve equal treatment and deserve full equality, or do we believe that there is a second tier that women, increasingly, belong to?”

“Moving into a restaurant that paid over the minimum wage had such a tangible benefit…”

“When we talk about this issue we can’t escape the fact that this is a women’s issue… forcing a worker to rely on tips for any portion of their base wage significantly increases their chances of experiencing sexual harassment.”

Once again, Representative Giarrausso claims that “I don’t really understand the connection to sexual harassment… If someone’s a jackass, for lack of a better word… I mean, I don’t promote sexual harassment. I think those people should be tied up and jailed and never come out.” Giarrusso claims he “can’t draw the parallel” between low pay and sexual harassment.

But Giarrusso tips his hand as he grins and asks, “Is there an acceptable level of sexual harassment depending on how much you’re getting paid?” This is simply a variation of the line, variously ascribed to George Bernard Shaw or Winston Churchill, “We know what you are, we’re just haggling over the price.”

In response to testimony quoting FDR, Rep. Giarrusso maintains that “there is data that shows that every time minimum wage goes up, so does unemployment.” The US Department of Labor dispels that myth at the top of its page on the minimum wage. Giarrusso also brings up the specter of automation, as is done now whenever minimum wage increases are discussed. I deal with the automation argument here.

Joe Fortune, speaking below, wrote about his experience speaking before the committee on his own blog here.

Notice the pineapple pin. RIHA is in the house. This man is a CPA who specializes in hospitality. I am willing to bet he makes more than $2.89 an hour plus tips.

John Elkhay owns Ten Prime Steak & Sushi, Rick’s Roadhouse, XO Café, Luxe Burger Bar, and Harry’s Bar & Burger, as well as Veritas Catering. “Unlike the people who testified before me,” says Elkhay, “I actually live and work in Rhode Island.” I guess he wasn’t listening to the experiences of the four speakers who do live and work in Rhode Island. After telling the committee about how many employees he has and how much money they all make, he throws them under the bus, saying, “They don’t claim all their tips, by the way. That’s a sneaky little secret.”

“Don’t say that in this building,” says Representative Giarrusso, trying to make light of the comment.

Elkhay doesn’t blink. “Yeah, well, it’s the truth.”

“Who is here, in the industry, saying there is a problem?” asks Chris Tarro, owner of Siena Restaurant Group, answering “I don’t think there is a problem.”

“Don’t take my word for it,” he continues. Rather, he recommends going out to dinner and asking a server. But, “don’t ask if they want a raise, everyone would like one.”

Tarro thinks that the kind of retaliation employees face for stepping up to complain about their working conditions is somehow equivalent to the reaction of potential customers when they hear about the ways restaurants pay their employees and the ways in which many restaurants exploit their employees. “When I testified last time here,” says Tarro, “I got emails, I was on progressive blogs… there’s a penalty to us coming here.”

“I would like to give a nice big golf clap to Representative Tanzi and to anyone else who is trying to distract you from the issue at hand…” is as much as this sarcastic restaurant owner could say before being stopped by Chairperson Shekarchi, who advised not going after those who previously testified.

“I don’t want character assassination,” said Shekarchi, “It doesn’t help your cause.”

“I would suggest to you that twenty years… twenty years without a raise… I don’t think there’s anybody in this room that’s going to work for anybody for twenty years without a raise.”

Kristin Dart, speaking for Planned Parenthood, said that when women are paid more, they are better able to pay for essential medical care.”If I have to choose between food on my table and my annual health exam, I’m going to put food on the table.”

Speaking of her own experience as a server, she said that she was regularly told by her bosses that sexual harassment was “part of the job. If you want to make tips, then you have to be ‘nice’ to customers.”

Amy Barclay owns Simpatico in Jamestown. She’s worked her way up from being a server, pregnant with twins making $4500 a week to owning her own place. She says, “This isn’t a gender issue. This isn’t a Planned Parenthood issue, this is a performance issue.” Barclay says, “I was great staff. I still am.”

Barclay has 15 core employees and 60 in season. “They beg for their jobs back,” she says, “and they should.”

Having worked in California, where there is no tipped minimum wage, and now working in Providence, Avi maintains that in California the restaurant industry is booming and that people in the restaurants out there have a greater feeling of teamwork. “It should be the employers responsibility to pay their employees, and not to pass that on to the customers.”

Ray Desmarais, of 99 Restaurants, sounded like he was blaming victims for for their harassment when he said, “For anyone to be harassed in the restaurant business, shame on them for allowing it. Leave and come work for me. Cause I’m a good guy and I’ll treat you well.”

Senator Joshua Miller says, “…there hasn’t been a minimum wage bill I didn’t love, until today, until this bill.” Miller feels this bill takes “important revenue away from some of my most valued staff.” He owns three restaurants with over 80 servers. Senator Miller, like Representative Giarrusso, sees no relationship between low wages and sexual harassment.

Justin Kelley said that “it’s time to raise the wage” in Rhode Island. Business models change, says Kelley, citing out the end of slavery, child labor and the eight hour day as examples. Compared to those changes, raising the subminimum wage should be easy.

“I think it’s a human rights issue,” says this restaurant worker from Olneyville, “I don’t care if your male or female, that minimum wage needs to come up.”

Bob Bacon is the owner of Gregg’s Restaurants and the president of the Rhode Island Hospitality Association. He frequently visits the State House to testify against bills that might increase a worker’s wage or strengthen a worker’s ability to not have their wages stolen. Bacon feels that the Department of Labor is doing a terrific job enforcing labor laws, and no new laws are needed. Servers make a “self-reported” average of $12.12 an hour, says Bacon.

Sam Bell, president of the Rhode Island Progressive Democrats, explained President Obama‘s support for increasing the minimum wage and for increasing the tipped minimum wage. “Raising the full minimum wage and the tipped minimum wage will help reduce poverty among women and families as well as make progress towards closing the gender pay gap.”

“Considering a tipped minimum wage increase… would cost ten percent of our current sales.” This begs the question: Is the entire profitability of the restaurant industry dependent on paying servers subminimum wage? Do restaurant profits come solely from underpaying staff? How do restaurants remain profitable in California, where there is no tipped minimum wage?

She finishes the evening’s testimony with, “we’re seeing servers being replaced right now with technology all over the world.”

As I’ve said before: technology like that is coming no matter what we pay our employees. The questions we need to be asking in the face of new technologies are bigger than minimum wage increases, such questions go to the heart of our economic system, and whether it’s sustainable in the long term.

March 9, 2015March 10, 2015

Raimondo supports a $10.10 minimum wage

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Governor Gina Raimondo announced her support of bills in the General Assembly that would raise the minimum wage in Rhode Island to $10.10 an hour at a press conference held at the United Food and Commercial Workers Local 328 on Silver Spring St. in Providence. The location was chosen because Raimondo’s grandfather helped found the union 77 years ago.

Raimondo pledged to support the bills introduced in the Rhode Island House by Representative David Bennett and in the Rhode Island Senate by Senator Erin Lynch.

“Nobody who works full time should have to live in poverty,” she said, even as she acknowledge that raising the wage to $10.10 won’t be enough. That’s why her budget, to be introduced on Thursday, will be “focused on creating more family-supporting jobs.”

Activists from the Restaurant Opportunity Center (ROC United RI) were present at the press conference and encouraged by the Governor’s support, but “they are also arguing for an increase in the wage of tipped workers who have worked without an increase in base pay for more than two decades,” according to their literature.

In an apparent nod to their concerns, Raimondo has tasked the new head of the RI Department of Labor and Training, Scott Jensen, to head up an investigation into “tipped minimum wage enforcement” and review restaurant labor law compliance after the present legislative session ends.

RI AFL-CIO President George Nee said that “we have to keep the momentum going” on raising the minimum wage, citing the “tremendous problem with income inequality.”

Deborah Norman, owner of the restaurants Rue De L’Espoir and Rue Bis said that “as a business owner I support an increase in the minimum wage to at least $10.10. It would not hurt my business in any way,” a very different message from that presented by the Rhode Island Restaurant Hospitality Association at a recent House Labor Committee hearing held to discuss Representative Bennett’s bill.

March 4, 2015March 4, 2015

Working for tips in Rhode Island

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At the State House hearing for the wage theft bill and for the bill to raise the minimum wage we heard a lot from members and leaders of the Rhode Island Hospitality Association. At the wage theft bill hearing the room was packed with restaurant owners pleading poverty and assuring legislators that their waitstaff are well cared for, and even loved.

Most of the restaurant owners were from the kind of high end, casual fine dining establishments where stories of well paid waitstaff might actually be something akin to the truth. But as Mike Araujo, of ROC United RI pointed out, “The average tipped worker does not make $20 an hour.”

“We are not all high end restaurants,” he said. “We are mostly Denny’s, we are mostly diner service. So to say that ‘my people do well’ or ‘I love my people’ might be true, but we have to love all the people who work in the industry.”

In Rhode Island, servers are supposed to make $2.89 an hour, plus tips. By law, if a server doesn’t make enough in tips to reach $9 an hour, the restaurant is supposed to make up the difference.

In general there are two kinds of restaurants; corporate chains like Denny’s or Chili’s, and owner operated diners and restaurants. The chain restaurants are governed in large part by strict rules and regulations that come from the top. These restaurants are national or multinational in nature and don’t often run afoul of local laws. They operate in California, where there is no tipped minimum wage, as well as in New England, where Rhode Island has the lowest tipped minimum wage. The tipped minimum wage is $7.25 in Connecticut and $3 in Massachusetts. New York just raised theirs to $7.50.

Non-chain restaurants have more leeway in paying their employees, because they can often pay under the table. There is no corporate chain of command tracking every cent that comes in and goes out of the store. This isn’t to say that all owner operators violate the law, but the practice is common enough that some servers I’ve spoken to have told me that they have never worked in a restaurant that didn’t pay some or all of its employees at least partly under the table.

I recently spoke to two servers at two different restaurants about the tipped minimum wage and their experiences working as servers in Rhode Island. One server works at a chain restaurant here in Providence, the other works at an owner operated restaurant in Warwick. Both spoke to me under the condition of anonymity, so as to not suffer any blowback at work. Some details of their stories have been obscured as well, to avoid identifying them accidentally.

Debbie is a single mom working at an owner operated restaurant. She has three kids. She’s worked for tips all her life. “This is how we survive,” she said. “We do all right. I’m pretty good at what I do most of the time.”

Chris is in her mid-fifties and has been working for tips as a server for over 30 years. She works for a well known corporate chain restaurant. “When I first started waitressing [the tipped minimum wage] was $1.50 or $1.59, so it’s gone up, but not for 20 years. It’s crazy.”

John's Diner by John Baeder — John’s Diner by John Baeder

The experiences of the women are similar, and they make about the same amount of money, but there are big differences between working at an owner operated restaurant and working for a corporate chain.

“We make all our money on tips,” says Debbie, “At the end of the week I get a paycheck, and it’s usually nothing, or a dollar, because of taxes. We get taxed on our tips and we get taxed on the $2.89.”

Chris has the same experience in her corporate store. “Some of my co-workers have a pile of $2 and $3 checks. Why bother cashing them? Or if they do, they cash them once a year for $80.”

Both work hard. “I work my ass off in here six days a week,” says Debbie, “I work like 45, 50 hours a week.” Chris works Monday through Friday. They both work the day shift.

I ask them about overtime.

“I probably shouldn’t say this,” says Debbie, “but the owner pays me for 40 hours and then I get the rest in cash. Time and a half has never happened. Every restaurant I’ve ever worked at that’s how it always was. You get paid for 40 hours and then everything else is overtime, not on a paycheck. Time and a half on $2.89 is meaningless anyway, because we’re talking about less than $4.50. It’s not like my tips are going to be time and a half.”

Chris sees this as a problem. “Corporate restaurants have to do the right thing,” she says, “But these [owner operated] restaurants, they can get away with not paying $2.89 or overtime.”

She said she knows someone who was injured and couldn’t collect disability because “so much of her work was off the books she didn’t qualify. I have friends that are working at some of these little places that aren’t making out. One girl got laid off and was told, ‘You can’t collect. You were working under the table.’ How are you suppose to deal with that?”

Working at an owner operated restaurant can bring other problems as well. “We don’t get time and half for holidays, we don’t get paid vacations,” says Debbie, “If I take a vacation I lose out. I pay for the vacation and I don’t get paid to work. My kids are like, ‘You don’t even get time off,’ and I’m like no, I don’t.

“You don’t get sick pay, you don’t get- I can’t even call in sick! There’s no one else to work. I open the store. Who’s going to answer the phone at 5 o’clock in the morning? If I’m sick, you’re not going to answer your phone, you know? You’re going to be sleeping.”

The recent snow has interfered with their pay as well. “It’s difficult sometimes, on a slow snow day, sure,” says Chris, “We didn’t get any customer tips until almost one in the afternoon and we’re thinking, ‘We’re not going to get anybody today.’”

So when it’s slow like that, does the restaurant make up the money as the law requires?

“They’re supposed to punch you in [with more money] when you make less than minimum,” says Chris, “but they average the week.”

Debbie agrees, telling me, “We don’t ever not make minimum wage, so the restaurant never has to make it up. On any given day we might not make any money, but the restaurant is allowed to average it out over the week.”

Debbie is worried about raising the tipped minimum wage. She worries that, “if they raise the minimum wage to $9 an hour people aren’t going to tip us, and if we made only $9 an hour we wouldn’t make what we would just living off tips. We make more than that in tips.”

Chris isn’t convinced. “People don’t know what we make. In the restaurant people are telling me, ‘I didn’t know you made this! I saw on the news they’re trying to raise your rates. I didn’t know you made only $2.89.’ If they already thought you were making more and they’re tipping you whatever they do, why would they lower it when you actually make that amount?”

Debbie has an ‘aha’ moment. “Yeah, you’re right. If you don’t know what I make, and you’re assuming that I’m making minimum wage when you tip me, then why would you not tip me?”

I point out that the minimum wage in Connecticut for tipped workers is $7.25, and nobody seems to be tipping less there.

“Really?” says Debbie, surprised, “I didn’t know they made more in Connecticut. Damn. It’s like right there.”

Chris isn’t surprised. She knows people who went to Connecticut to make more money. “A couple of girls who live on the line transferred to Connecticut, but I live too far,” she says. Transferring wasn’t hard, because the corporate restaurant chain has units in every state.

Both servers mentioned that working at a higher end restaurant in Providence might bring in more money. “I would have loved to have gone to Federal Hill,” says Chris, “but I don’t see myself, at my age, going there, working at some fancy restaurant.”

But both women also had heard stories that worried them.

“I had a friend who worked at a nice, upscale restaurant in Providence,” said Debbie, “and she worked Friday and Saturday night and made a lot of money, but for every good shift you got there you had to take a crappy shift on a Tuesday afternoon or something. On a Monday-Tuesday lunch, she might make $3. But she still had to pay to park, and she had to pay for her gas because she doesn’t live in Providence. So she’d drive to Providence, pay to park, drive home and leave negative basically.”

“One girl I know applied at a very nice place on Federal Hill as a cocktail waitress,” says Chris, “She didn’t take the job because they told her you don’t make a pay, you just work for tips and all of you pool your tips at the end of the night.”

So they don’t pay the cocktail waitresses anything?

Chris nodded. “She never took the job. I told her that’s not right. She was asked, ‘You want taxes taken out? You want to go through all of that?’

“I have friends who worked on Federal Hill. A lot of them get paid under the table. The [owners] should have to do the right thing, but that’s what they don’t want to do. Corporate restaurants have to pay you the right wages. They have so many restaurants, and they pay different amounts everywhere they’re set up, but you’d think the corporate restaurants would want these other restaurants to pay employees on the books so that they could compete better.”

So, I ask, are you two living the high life?

“I see people working to get $15 an hour at McDonald’s but we don’t make that,” Debbie says, shaking her head. “Every so often we may make that, but not all the time.”

“I don’t live the high life, God no,” says Chris.

March 2, 2015March 3, 2015

Restaurant workers and owners wrestle over tip theft

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House Bill 5363 which attempts to curb tip theft in the service industry and give employees additional power to combat the practice, was introduced by Representative Aaron Regunberg this year. It is identical to the one introduced the last two years by Rep Chris Blazejewski with the big difference being that public awareness of the pervasiveness of tip and wage theft is growing due to some serious studies released recently (along with the efforts of the Fight for $15 movement) and the addition of a new player here in Rhode Island as Mike Araujo takes the helm of a new local branch of the Restaurant Opportunity Center, ROC United RI.

“Tip theft is a practice in which employers or managers appropriate some of the money left as tips for restaurant, hotel or other service workers,” Regunberg explained.

It primarily occurs, he said, in four different ways:

1. Employers can demand a cut of tips from workers
2. Employers can absorb automatic service fees who you might think would go to those workers that provided the service,
3. Employers can charge workers if customers use credit cards
4. Employers can include themselves in the tip pool and then take a cut of that pool.

“For me there’s a few different angles to this issue,” said Regunberg, “Besides being a workers protection issue, I really believe it’s fundamentally a consumers rights issue as well. If I am eating at a restaurant or staying at a hotel, and I leave a ten dollar tip, I assume the entire ten dollars is joined to the workers who did the work that I paid the tip for. I think that’s a reasonable assumption, one that’s shared by the vast majority of customers.”

Chris Tarro, owner of Siena Restaurant Group, sidestepped the issue as to whether or not customers are being duped when restaurants take part of a tip or the entirety of a service charge, saying, “Every employee in my facility knows, when they get hired, that I deduct the credit card fee on their gratuity only.”

Mike Araujo of ROC United RI, countered that, “To say that the credit card fee or the commission that’s paid is on the gratuity alone is kind of a misnomer. The fact is that a tip is a wage. It’s making up the difference in a wage that’s already too low, so anything that comes out of that wage is directly coming out of the pocket of that employee.”

Joey DeFrancesco, who became an Internet sensation with his video “Joey Quits” in 2011, explained one way in which the present process works against the employee actually providing the service.

“I worked at the Providence Renaissance Hotel… this is a pretty fancy place… I worked in room service and we made about $5.50 an hour, so below minimum wage. On top of that we got service charges in the hotel. Each bill going to room service got a 20 percent service charge. the customer sees that bill, assumes that’s a tip, and is not going to tip you. You’re not going to be impolite and say, ‘Actually, you know, we’re not getting that,’ you know, that’s against the rules.

“What was actually happening is the hotel was taking that 20 percent service charge and then our managers, supervisors who were making more than twice as much as us per hour, were taking half of that. So at the end of the day the servers actually conducting the work were making less than half of the tip money that customers believed they were giving to those servers.”

Joseph Fortune worked at Ruth’s Chris Steak House in downtown Providence during the entirety of it’s being open.

“If it was a booked banquet, I would still be making $2.89 an hour. The tip would look like a 20 percent tip going to the waitstaff, but really 17 percent went to the waitstaff and the other 3 percent was administrative for the managers. And pretty much, the customers never knew that… I would be fired if I told them, ‘Look, that 3 percent isn’t going to me.’”

The restaurant owners in attendance, mostly members of the Rhode Island Hospitality Association (RIHA), disagreed with the way the issue was being framed, and disagreed on the basic definition of certain terms, like service charge, gratuity and management. Kristin Gennuso, of Chez Pascal, explained why she thinks there’s a difference between a tip and a service charge.

“They are not considered to be the same thing by the IRS,” said Gennuso, “A tip is money that is left by a consumer. It is left free of will. A service charge is imposed, put on by the establishment. Sometimes you’ll see that for parties of six or more there will be a 20 percent gratuity, excuse me, service charge.”

“When you add a service charge to someone’s bill, you the consumer has to pay an 8 percent tax on that service charge. Then I take that service charge, I have to put that in as a sale… and then I can distribute it to my employees through payroll where the taxes can be taken out. So it’s consider a sale, that raises my sales liability, I have to put it into my payroll, which raises my payroll, and my worker’s compensation liability, and then I can distribute it out as I see fit because it’s an item on a check.”

“So, if it says a service charge, it’s not a tip. They’re two very different things.”

House Labor Committee vice-chair Rep Thomas Palangio pointed out that when a customer sees a service charge on a bill, they are going to assume that it’s for the server, to which Gennuso replied, “That’s a problem with the language, isn’t it?”

When Palangio pressed that people won’t tip as much, because they assume it’s taken care of in the service charge, Gennuso countered, “But it’s not the fault of the employer, however.”

Restaurant owners had other complaints as well. Chris Tarro explained that he has “140 employees, and I love my employees. I love ‘em. So when I hear the word ‘fraud,’ or ‘steal,’ or ‘take advantage,’ I get pissed off. I love my staff. When it snows and we have a bad day, I care more about them than about me. I’m getting choked up because I care about them, and I don’t know a restaurant owner that doesn’t.

“This is the industry I love, and this is one of the only thriving industries in the state, and we’re being attacked.

“This bill- I get the intent of this bill- we shouldn’t steal from our staff. I absolutely agree that this is a worthwhile goal but this bill isn’t the way to accomplish it.”

This prompted Jaimie, a restaurant worker in support of this bill, to counter, “If [Taro] really loves his employees and wants to protect them, there’s no reason there should be any opposition to this bill.”

“This legislation,” says Representative Regunberg, “is not punishing businesses. It doesn’t add an additional tax onto business owners. What it does is ensure that workers, many of whom are low wage workers relying on those tips, receive the gratuities that they worked for, and customers’ money goes where it was intended to go.”

But Chris Tarro thinks the bill does impose a cost, saying, “This bill avoids the Rhode Island Department of Labor and Training (DLT) and goes to Superior Court. We have a DLT to handle this, but the bill would move these cases to the much more costly superior court.” (Though unsurprisingly, I have never heard of a business owner who would willingly forgo Superior Court in the case of an employee caught stealing from them.)

Bill Kitsilis, an attorney as well as the owner of Angelo’s Pizza Palace, complained that “what scares me about this bill is that it’s a pro-plaintiffs bill. There’s a lot of propaganda to say it’s protecting employees, it’s tip theft and wage theft, but what this is is an administrative nightmare for especially pizza restaurants, the counter service, coffee shops, you name it.”

“This bill says that you can only share the tips in proportion to the work done by the service employees. What does that mean? On a Friday night at Angelo’s Pizza I have two people working the counter up front, two cashiers in the back answering phones but they’re not doing the same exact work. There’s one tip jar up in the front and they all share it equally. We’ve been doing it this way for thirty years without a problem.”

“What happens here, when you have a law that brings you right to Superior Court, it absconds, because you don’t go to the Department of Labor anymore, and it makes you pay if you lose, even a little bit. Trying to defend what proportionality means and sharing of tips? Who a manager really is and who a manager isn’t?”

“Put this in the hands of a plaintiffs attorney where they get to go to court and they’re entitled to attorney’s fees and triple the damages if they just win a little bit? or put a gun to an owner’s head where you’re forced to settle. No offense to any attorneys on this board.”

This prompted Rep. Joe Shekarchi, the chairman, to distance himself from the legislation, laughing, “I can assure you that none of us drafted this bill.”

Bob Bacon, head of the Rhode Island Hospitality Association and owner of Gregg’s Restaurants argued that, “A state law on this would be redundant to the federal law. The federal law is very thorough. It’s very well enforced…”

Joey DeFrancisco disagreed with Bacon’s assessment. “I thought federal law would cover [the tip theft I experienced at the Renaissance Hotel Providence], so I went to the Department of Labor… and I said, ‘This is crazy that this is going on, can you guys investigate?’ This was in 2011. They did so, they looked into the issue, they interviewed managers and workers they got back to me and said, ‘Okay, in fact, they are stealing your tips, however because they are not stealing enough of your tips that it’s putting you below minimum wage, there’s actually nothing the federal Department of Labor can do about this.”

Remember that there are many different ways in which tips may be stolen by management. So sometimes, when the fines are big enough and the case is against a high profile target, the US Department of Labor does step in. “Mario Batali was fined $5 million” for wage theft, points out Chris Tarro.

“The federal laws are simply not sufficient,” concludes DeFrancisco. “They do not cover tip theft in the forms we’re talking about, which is why so many states… have passed bills like this.”

In fact, according to Regunberg, “Rhode Island is significantly behind the eight ball on this issue. By my count there’s at least 23 other states that have state legislation banning some or all forms of tip theft, including most of our neighbors. New Hampshire, New York, Maine, Massachusetts, Vermont, etc.”

“If you pass this bill and servers cost more,” warns Chris Taro, “the people that might get hurt are the people who are already the lowest paid in the industry. The cooks. The dishwashers. The cleaning guys.

“I want my servers to make more money,” continues Tarro, “This isn’t the bill to do it. Let’s work together promoting this industry. Let’s educate the people who are breaking the law and penalize them. Let’s get together and spend more money on tourism because our state is pitiful and behind. I do more business, they make more money. Simple as that.”

But to argue that laws meant to protect low wage workers hurts the restaurant industry ignores the fact, says Mike Araujo of ROC United RI, that, “the people who serve are part of the industry.”

He said, “The average tipped worker does not make $20 an hour. We are not all high end restaurants. We are mostly Denny’s, we are mostly diner service. So to say that ‘my people do well’ or ‘I love my people’ might be true, but we have to love all the people who work in the industry.”

Bob Bacon made a counter offer that would involve no intervention from government. “…as chairman of [RIHA] last year and as a member of the board the year before, and I’ll reiterate this year again, if one of these people that says they have all these problems, if they want to come to us, I’ve offered for three years in a row to do the following: First, we’ll keep the employees name confidential. Second, we’ll meet with the employer and we’ll bring the complaint to their attention, third, we’ll work to educate that employer on the U.S. Department of Labor’s rules and regulations on the matter, and fourth, probably most important, in the event that an employer chooses to stay out of compliance with an issue, we would assist the employee in going through the appropriate channels to get the situation rectified.”

It doesn’t seem to have occurred to Bacon that the idea of an employee, going to a consortium of power players in the restaurant and service industry here in Rhode Island to make a complaint with no guarantee of legal protection of the kind granted by the government, might be seen as career suicide. The idea that wage theft can be dealt with by the very industry committing the violations is absurd.

“…the majority of the people in this industry, they object to the people who may violate [laws against wage and tip theft],” says Bacon, “Thirty-five years plus in the industry, I’ve never encountered it, but I’m not naive enough to say that it doesn’t exist. I can tell you that it doesn’t exist on the level that’s being portrayed here tonight. I can say that without any reservation.”

Back in reality, Rep Regunberg said, “In order for us to have a productive dialog and come to a solution that optimal for all parties, we first have to take as valid that this is a real issue. This is a practice that happens, and I’m by no means implying that all employers engage in tip theft, but I can almost guarantee you that if you talk with nearly any service worker, they can clarify that this is something that takes place and not as an isolated incident. This is something that can occur regularly, that places a real burden on Rhode Islanders who are working hard and are relying on tips to make ends meet.”

Mike Araujo was more pointed. “The fact is that the people who work for tips in Rhode Island use public assistance at a rate twice that of any other employee. Of the 20,000 people who work for tips in Rhode Island we’re talking about 10,000 who are on assistance. Clearly, every penny counts to these people.

“The cost of public assistance, just in food assistance to tipped workers in Rhode Island, amounts to $700,000 per month,” continues Araujo, “It’s vital that this passes. This is an issue of poverty, this is an issue of equality, and this is the right thing to do.”