Plan for tipped workers could kill off more NJ restaurants, lawmakers told

💵Plan to phase out tip credit gets panned
💵Tipped workers make minimum wage, many report above
💵Assemblywoman vows to oppose bill, to applause

TRENTON — Servers, bartenders and restaurant owners from across New Jersey turned out for a 90-minute hearing, blasting a plan to change the base wage for tipped workers by phasing out the model that’s been used.

The bill would amend the state’s minimum wage law, phasing out a “tip credit system” that allows any employer of tipped workers to count a portion of earned tips toward the minimum wage.

Assemblywoman Claire Swift, R-Atlantic, said she was shocked to even see the measure introduced, as she knows restaurants are still picking up pieces from the COVID pandemic.

Restaurants suffered “irreparable damages” five years ago, Swift said, adding it is an awful time to now consider phasing out the tip credit, with the price of “eggs, and food and gas going up — the payroll tax just went up, utilities are going up, so I am adamantly opposed to this bill.”

Assemblyman Erik Simonsen, R-Cape May, also took part in Thursday's hearing and said he grew up in the restaurant industry.

“I can’t wrap my head around this bill, but there’s some real simple math for ya, and that’s the fact that there’s seven states that do it, which means there’s 43 states that don’t,” Simonsen said, sparking strong applause from the crowd.

“I’m not a rocket scientist but that tells me what I need to know.”

He credited Assemblyman Robert Karabinchak, D-Middlesex, for opening the measure for discussion in place of a scheduled vote by the State and Local Government Committee.

The measure, A5433, was introduced last month by Assemblywoman Verlina Reynolds-Jackson, D-Mercer.

Read More: NJ restaurants say proposed wage bill would devastate businesses

Public response has been largely uniform regardless of political affiliation, as members of the New Jersey Restaurant and Hospital Association have sounded the alarm against what damage the change would cause.

“I hope that this bill never comes back for a vote, cause I’ll vote against it,” Swift said.

The minimum wage/tip credit measure also applies to beauty salons, where staff are tipped for hair, nail and spa services.

New Jersey also already has what is called "the 80/20 rule" for tipped employees doing non-tipped work.

When a tipped employee spends more than 20% of their time performing related non-tipped duties, the employer is prohibited from taking a tip credit for that time — whether folding napkins or restocking ingredients at a restaurant, or salon workers mixing hair treatments.

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