Public laws regarding tipped workers are designed to ensure that workers who receive a substantial portion of their income through tips are given the same worker protections as everyone else. That includes the right to a minimum wage, even if their tips in any given pay period are low.
But Maine’s outdated definition of “tipped worker” leaves many service workers at risk for wage theft. A bill before the Legislature this year — LD 1489, “An Act to Modernize the Classification of Service Employees,” sponsored by Rep. Scott Cuddy — would help fix that.
Maine law allows tipped workers to be paid half the minimum wage, as long as they receive enough in tips to make up the difference. If they do not, the law requires their employer to “top off” their paycheck to at least the full minimum wage. Unfortunately, we know that this doesn’t always happen. It’s all too easy for an employer to forget to check a paycheck to ensure that an employee is receiving at least the statutory minimum wage. MECEP’s 2019 survey of Maine workers found that a small but significant portion of Maine workers – equivalent to 15,000 Mainers — have experienced wage theft through an employer failing to ensure a full minimum wage for tipped employees.1
Today, the definition of “tipped worker” is outdated, leaving too many workers in the precarious position of a low base wage and a low expectation for tips. Maine law currently defines tipped workers as any employee who earns $30 a month in tips. That means hotel cleaners, coffee shop workers, and other Mainers who only occasionally receive gratuities can be paid the subminimum wage of $6.08 per hour — hardly a fair wage for workers who may receive as little as $30 per month in tips.
LD 1489 would update Maine’s definition of tipped workers to ensure that only Mainers who receive a substantial portion of their income in tips — at least $175 per month — can be classified as tipped workers. This has always been the intention behind Maine’s statutory definition of tipped workers. The bills also would update the threshold regularly to account for the increased cost of living, and ensure that it keeps pace with inflation in the future.
LD 1489 will reduce the prevalence of wage theft, particularly among the lowest-paid workers who are most vulnerable to the practice, and least able to speak out against their employer.
MECEP estimates that around one in seven tipped workers in Maine currently receive less than $175 a month in tips. While most of these are currently paid the regular minimum wage and are allowed to keep their small amount of tips on top, a substantial number are paid the lower tipped wage. LD 1489 will remove the risk of wage theft for these Mainers, as well as raise the take-home pay by an average of 33 percent, or $58 per week.2
LD 1489 represents a common-sense update to existing law that would protect the wages of low-income Mainers. It would be a meaningful step in tackling wage theft in Maine and improving the lives of Mainers in our service industries. MECEP urges the Legislature to enact the bill.
Notes:
[1] Myall, James, and Mario Moretto. “State of Working Maine 2019.” Maine Center for Economic Policy. Dec 18, 2019. https://www.mecep.org/maines-economy/state-of-working-maine-2019/
[2] MECEP analysis of US Census Bureau, Current Population Survey, Outgoing Rotation Group, 2010-2019 data, 120-month average. Earnings were adjusted for inflation and state minimum wage increases.
