Williams Bill Would Increase Minimum Wage for Tipped Workers

DOVER – Waitstaff and workers who rely on tips and gratuities could see their first hourly wage increase in more than 35 years under legislation unveiled Thursday.

Sponsored by Rep. Kim Williams, House Bill 252 would replace the current floor for tipped employees from $2.23 per hour with a requirement they not be paid less than 65 percent of Delaware’s minimum wage. Under the current $8.75 per hour wage, that would be $5.69. When the minimum wage increases to $9.25 per hour on October 1, the tipped wage minimum wage would increase to $6.01 per hour.

The minimum wage for employees who receive tips or gratuities has not changed since 1983, when the overall state minimum wage was $3.35 per hour. Tipped wage workers at that time were paid a percentage – 66.67 percent – of the minimum wage, which was $2.23. In 1989, the General Assembly changed the hourly wage to a flat $2.23 per hour (effective 1990), where it has remained since.

“When I waited tables at Mrs. Robino’s 35 years ago, I made the same hourly wage that waiters and waitresses make today. It’s unconscionable to think that we have gone 30 years without providing even a modest increase in the minimum wage that these workers earn,” said Rep. Williams, D-Newport. “While waitstaff earn more in tips today than decades ago, taxes and the cost of healthcare have increased, and so has the cost of living. Because their tips are a much larger part of their overall pay, it means there’s a great deal of unpredictability in their wages, which can create problems.

“By providing this much-needed increase to the thousands of waiters, waitresses and other tipped workers across Delaware, we will provide them stability and a reasonable base pay for the services they offer to restaurant-goers.”

Since 1990, when Delaware’s tipped wage was locked in at $2.23, the cost of living has nearly doubled, while prices for many consumer goods, such as bread, milk and gas, have doubled or more. Median housing values have grown by more than 125 percent. In-state tuition for the University of Delaware has ballooned by more than 450 percent in that time.

“As legislators, we are tasked with making sure that our laws grow along with us,” said Sen. Jack Walsh, D-Stanton, prime senate sponsor of the bill. “A startling amount of job growth post-2008 has happened in the service sector, especially in restaurants and other tipped wage positions, but the adjusted minimum wage we allow employers to pay these workers hasn’t budged since 1990. That, for me, sends up a red flag and I’m thankful to my friend and colleague Rep. Kim Williams for bringing this important bill forward so that we can revisit this issue.”

Rep. Williams and Sen. Walsh also announced legislation Thursday that would clarify the definition of employees who receive gratuities. The statute surrounding tipped wages is convoluted, allowing for employers to have different interpretations.

House Bill 251 would clarify those definitions and require more accountability from employers. It would define employees who receive gratuities as including employees who receive tips, that these employees must earn at least 50 percent of their income from tips or gratuities, and that the tips must come directly from customers not from tip pools or other similar intervening mechanism.

Additionally, tips automatically added to credit card charges would be treated like tips or gratuity and must be paid by the employer directly to the employee at the next pay period as opposed to being held by the employer waiting to receive payment from the credit card company. The employer would not be permitted to deduct service fees from the employees’ tips or gratuities.