Service industry workers testify as lawmakers consider chopping tipped wage and sick leave laws

BY ANNA LIZ NICHOLS, MICHIGAN ADVANCE

MICHIGAN—There’s a misconception that Michiganders can’t make a career out of waiting tables or working in family-owned businesses, according to the restaurant workers and other service industry professionals who offered testimony Tuesday to a legislative panel.

The newly formed Michigan House Select Committee on Protecting Michigan Employees and Small Businesses was filled with workers from across the state who offered their support to bills to undo a mandate to phase out the tipped wage credit and set requirements for paid sick leave that are set to take effect Feb. 21.

This is the first issue the GOP-led House is tackling this session with HB 4001 and HB 4002 being considered by the new subcommittee — before most standing committees have been established.

Republicans led a boycott in the House at the end of last session, citing inaction from Democrats — who controlled the chamber at the time — in taking up reforms to tipped wage credit and sick leave. That resulted in the House being unable to vote on the last bills in the session, as there weren’t enough members present.

The state Supreme Court issued a decision last summer upholding a long-disputed 2018 law that increased the paid sick leave companies have to offer workers and upped the minimum wage while phasing out the tipped wage credit.

But the court didn’t consider that plenty of people make their livelihood off of tips, Lu Hayoz, owner of the Peppermill Cafe in Grand Rapids told legislators.

Right now, the sub-minimum wage pay that is allowed to tipped workers is set to be dismantled in favor of increasing all minimum wage to $15 by 2028.

The main message from restaurant workers who lent their voice to support legislation watering down the impending mandates is that they make more money with tips than they could ever make earning minimum wage. Business owners and servers like Hayoz told lawmakers Tuesday that without the tipped wage credit, restaurants will have to increase prices and they’ll have trouble hiring staff when people around Michigan stop tipping due to increased menu prices.

“Being a server has allowed me to pay for a college education, buy new cars, buy homes, support my family, and rescue many dogs in need. This is the life I have chosen for myself,” Hayoz said. “Now, with the tip credit being eliminated, my livelihood is at risk. I don’t know how I will continue to keep my lifestyle up that I have created for myself all these years, I’ve never had to worry about things like paying my bills, putting food on the table, taking care of my special needs dogs, paying for my outrageous health insurance, among many other expenses that just come along with living your life.”

And there’s nothing “minimum” about the job restaurant servers do, Stacy Seals, representing TEAM Schostak Family Restaurants, told lawmakers.TEAM Schostak Team Family Restaurants is owned by former Michigan Republican Party Chair Bobby Schostak.

Seals recalled for the committee how when she was a server at Applebee’s there was a group of veterans that would meet up at whatever location she’d work at because she sees her role in service as an opportunity to connect with customers on a personal level.

“It’s not a minimum job, what we do. I know a lot of people look at us as this service, but we create an environment…We’re making sure that you get everything that you need when you come in for a birthday, a funeral, something with your family. We make those moments. We’re hosting that creating that atmosphere,” Seals said.

Tipped wages would remain at 38% of minimum wage under the HB 4001 and the path to a $15 minimum wage would be bumped back by one year to 2029. Small businesses would be spared from some of the impending sick leave requirements under HB 4002 if the business has less than 50 employees.

As the state Supreme Court’s decision stands, businesses with over 10 employees will have to offer workers up to 72 hours of earned paid sick leave annually and small businesses with less than 10 workers would have to offer up to 40 hours of paid sick leave annually and 32 hours of unpaid sick leave.

But the legislation represents a pay cut for Michigan workers and a rollback of benefits that would help families in Michigan who may need to take time off when they or family members are sick, said AFL-CIO Director of Government Affairs Ryan Sebolt.

“It also needs to be made clear that phasing out the tipped wage does not end tipping … I prefer to be one of the people who tips close to 30%,” Sebolt said.

With the expectation that businesses will raise menu prices to be able to pay workers more for minimum wage and hire additional staff to offset increased sick leave, Sebolt said the House’s proposed changes continue to demand that consumers, not business owners, foot the bill to offer liveable wages for workers.

Committee Chair Rep. Bill G. Schuette (R-Midland) told the media after the meeting there will be more testimony Thursday on the bills. He added the committee is communicating with the Democratic-led Senate, which also has bills curbing the same policies, to come up with the best bills to pass out of committee.

READ MORE: Michigan Senate hits the ground running, introducing FOIA, minimum wage and sick leave changes

This coverage was republished from Michigan Advance pursuant to a Creative Commons license.