Should tipped employees be paid the full minimum wage? Massachusetts residents voted a resounding “No” and rejected a proposed change to the state’s minimum wage law that would have required tipped employees to be paid 100% of the minimum wage by 2029, as opposed to the $6.75 minimum cash wage.
The proposed amendment on the ballot would have abolished the tip credit that allows employers to count $8.25 of an employee’s tips toward the minimum wage per hour. Had it passed, the amendment would have allowed employees to collect tips on top of the minimum wage by 2029.
Currently, only seven states (Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington) and Guam require tipped employees to be paid the full minimum wage. Notably, only California, Washington, and certain regions in Oregon currently have a minimum wage higher than $15.00.
Through their votes, Massachusetts residents demonstrated their discomfort with doing away with the tip credit, perhaps realizing that if restaurants have to pay an additional $8.25/hour to employees, that cost is likely to be passed onto them.
What will other states do? In Ohio, this issue was raised to be placed on this election’s ballot but died without enough signatures to make it there. Connecticut currently has a bill pending that would similarly phase out tips from being considered part of the minimum wage. A similar bill in Connecticut died last year and it is unclear whether this year’s bill has the support to pass.
It will be interesting to see whether other states raise this issue or maintain the status quo for tipped employees.