Question 5 in Massachusetts – What is it all about?

In November voters in Massachusetts will be asked a question.

Should tipped restaurant workers in the Commonwealth make the full minimum wage with tips on top? Once all workers in an establishment make the full minimum wage, should the employer be able to institute a tips-sharing model, allowing tips to be shared throughout the non-management team?

What does this mean? To fully understand this, it is important to know how things work currently. In Massachusetts, it is legal to pay tipped workers $6.75/hour, assuming they receive enough in tips each hour to bring them up to full minimum wage, $15/hour. If tips do not bring the wage to $15, the employer must make up the difference. However, tracking compliance with this is difficult. When the employer doesn’t make up the difference (often as an oversight and not intentionally), this can result in a wage theft claim. In Massachusetts, wage theft makes up 30% of the  Department of Labor’s claims to the Attorney General’s office.

In Massachusetts, it is not legal for tips to be shared with anyone outside the chain of service. Federal law is different and states that once a full minimum wage is paid to all workers, a tip-sharing model can be implemented. But Massachusetts and New York are the only two states that do not follow this guideline.

Tip pooling is a common and recognized practice across the board – that is, tips are shared by all chain-of-service workers – and the employer is free to require the tips be pooled. This is a common practice, even in Massachusetts. (note – difference between tip pooling and tip sharing – one is with chain of service, the other is the entire non-management staff) .

How does all this look in operation? Will servers lose their tips, as the opposition is saying? “Save Our Tips!” is the opposition’s rallying cry. But is that what’s really going to happen?

The answer is a resounding, “NO!”

Here is how this increase to full minimum wage will play out:

• Servers will keep more of their tips in the years of the roll out. – As any tipped restaurant worker will tell you, their wages almost never cover the total amount of their taxes, Medicare and Social Security contributions. A server, whose typical shift is 6 hours, makes $202.50/week in wages.  Servers will tell you they make more than that, with tips. So where does the money come from to pay the remainder of the taxes, MC and SS contributions? Their tips. But if the weekly wage increases, there will be more money from wages to cover the taxes, MC, and SS.  Less money will be coming out of tips in their paycheck.

• Customers will not stop tipping because they think the server is making a full wage. That is just not how tipping culture works. We know this because the vast majority of people tip based on service and food (Pew Research Report – November 2023). Many tip based on societal pressure. But if servers think people tip out of pity for their poor wages….I think that’s sad.
• Customers have become more resentful of the practice of tipping as they find they are asked for tips in more situations – at the coffee counter, at the dry cleaner, at the florist. If tipping goes down, it seems more likely to be as a result of this, than to be a result of the increase in wages.
• Prices at restaurants may go up, but that is less a reflection of the increase in wages than an increase in across-the-board expenses. Restaurant operators may look to find ways to increase their revenue to manage these increases. However, it is important to note that the increase to labor cost on average may be as little as 2% which does not translate to a need for 40% increase in revenue.
• When wage parity is reached at the end of five years, tips sharing can be initiated by the employer. Tip sharing is a way to include everyone in the success of the business. Tip sharing brings everyone – kitchen staff and wait staff – into the conversation of hospitality. It gives everyone on the entire team some skin in the game.

Restaurants that currently use this model describe having better team work, a staff that works together better to make the experience for the guest better.

The method of tip sharing can be different from one establishment to the next, but this is one powerful way an operator can improve the overall culture of the restaurant working environment.

Many servers seriously object to sharing their tips. I cannot speak for them, because my experience is from the kitchen side. I can say that kitchen folks often resent servers because they make more money that the average line cook.  When asked, most chefs will say they want to do away with tipping altogether. In this environment, that is not realistic. However, Question 5 is one step towards a more equitable wage system for the restaurant industry, which benefits everyone. That is what the restaurant industry needs.