National Restaurant Association of America
09/18/2024 | Press release | Distributed by Public on 09/18/2024 10:12
Restaurant Industry Experts Underscore Importance of the Tip Credit for Workers During Congressional Hearing
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September 18, 2024
Restaurant Industry Experts Underscore Importance of the Tip Credit for Workers During Congressional Hearing
Committee on Education & The Workforce, Subcommittee on Workforce Protections, Examines the Biden-Harris Attacks on Tipped Workers
Washington D.C. - Today, during a Committee on Education & The Workforce, Subcommittee on Workforce Protections, hearing titled "Examining the Biden-Harris Attacks on Tipped Workers," several industry experts came together to express their overwhelming support for the tip credit.
Tom Boucher, CEO and Owner of Great New Hampshire Restaurants Inc., testified on behalf of the National Restaurant Association. During his testimony, Boucher explained: "The tip credit is vital to restaurants like mine. It allows employees to earn significantly more than the federal minimum wage while helping restaurants manage labor costs."
Boucher's full testimony is below. A stream of the hearing is available here.
The tipped servers and restaurant owners, with the support of the National Restaurant Association and the state restaurant associations, have won hard-fought battles to preserve the tip credit in 13 states and three municipalities this year alone. A recent survey of nearly 4,000 tipped workers in states facing tip credit elimination threats this year, found that nearly all (90%) of tipped employees prefer the current tip credit system over higher flat wage models while more than eight in ten (87%) feared their earnings would drop if employers were required to pay the full minimum wage amount.
FULL ORAL TESTIMONY OF TOM BOUCHER
CEO and Owner, Great New Hampshire Restaurants, Inc.
Before the House Committee on Education and the Workforce
Subcommittee on Workforce Protections
"Examining the Biden-Harris Attacks on Tipped Workers"
September 18, 2024
Chairman Kiley, Ranking Member Adams, and distinguished members of the Subcommittee, thank you for the opportunity to testify today. My name is Tom Boucher, and I am the CEO and owner of Great New Hampshire Restaurants, Inc. What began as one small restaurant in 1984 has grown into nine locations, employing 800 people and serving over two million guests annually. I am proud to say that we are celebrating our 40th anniversary this year.
In 1987, I started as a server at T-Bones, learning every aspect of the business from the ground up. This is not just my story-it's the story of thousands in our industry. The restaurant industry is unique because it provides upward mobility, offering opportunities for anyone-regardless of background-to start in entry-level positions and build lasting careers through hard work and dedication. Over 60% of Americans have worked in a restaurant, and 8 out of 10 restaurant owners, including myself, started in those same roles. The restaurant industry doesn't just provide jobs-it provides a path to success, offering opportunities for personal growth, financial independence, and entrepreneurship.
That said, running a restaurant isn't easy. Margins are razor-thin, and well-meaning legislation or regulation, if it doesn't account for the realities of our industry, can have serious unintended consequences. Today, I want to focus on two key issues affecting restaurants and their employees: the tip credit and the Department of Labor's 80/20/30 rule.
The tip credit is vital to restaurants like mine. It allows employees to earn significantly more than the federal minimum wage while helping restaurants manage labor costs. At my restaurants, servers consistently earn between $20 and $30 per hour, with some earning even more. No tipped server makes less than minimum wage, and they are protected by federal law to ensure that.
Our employees understand how important the tip credit is to their livelihoods. In fact, some of my employees launched a campaign called WeLikeOurTips.com to voice their support for keeping the tip credit intact. They know that eliminating the tip credit would limit their earning potential.
We've already seen what happens when the tip credit is removed. In New Hampshire, two restaurants switched to a flat hourly wage model, and their servers left for other restaurants where they could earn more through tips. Both businesses eventually closed. The very workers these policies are meant to help end up losing out.
Here in Washington, D.C., nearly 1,000 restaurant jobs have been lost after voters passed Initiative 82 to phase out the tip credit. A survey found that 86% of local restaurant operators believe the rising tipped minimum wage harms their operations, leading to increased prices, reduced staff, and closures. These are the real-world outcomes of policies that do not consider the unique needs of the restaurant industry.
Without the tip credit, labor costs for restaurant operators would skyrocket. We'd be forced to substantially raise prices, cut hours, or in the worst cases, shut down. The ripple effects would hurt local farmers, suppliers, and other businesses. When restaurants close, the entire local economy suffers.
In addition to preserving the tip credit, I'd like to address the Department of Labor's 80/20/30 rule. This rule restricted the amount of time tipped employees could spend on non-tipped tasks, creating unrealistic and unnecessary burdens. In the fast-paced world of restaurants, employees often switch tasks "on the fly." A server might reset tables, restock items, or roll silverware-all part of ensuring the best possible customer experience.
Tracking and limiting these tasks was not just impractical-it was impossible. Thankfully, the Fifth Circuit Court of Appeals struck the rule down, recognizing that it didn't reflect the realities of our industry. But we need to ensure that this kind of burden doesn't return. That's why we support H.R. 1612-the Tipped Employee Protection Act-to prevent the reintroduction of a similar rule. Flexibility is the backbone of restaurant operations, and we can't afford to lose it.
Chairman Kiley, Ranking Member Adams, and distinguished members of the Subcommittee, thank you again for the opportunity to speak with you today. In conclusion, I want to emphasize that the decisions made here have real-world consequences. The restaurant industry is a cornerstone of local economies, providing jobs, fostering community engagement, and offering pathways to economic mobility and personal success. The success of restaurants like mine depends on policies that allow us to operate sustainably and contribute to the local and national economy.
Eliminating the tip credit or reinstating rigid rules like the 80/20/30 rule would hurt employees, small business owners, and the communities that rely on us. I urge you to carefully consider the broader impact of these policies and protect the flexibility and structure that allow the restaurant industry to thrive.
Thank you.
Tom Boucher, CEO and Owner of Great New Hampshire Restaurants Inc., testified on behalf of the National Restaurant Association. During his testimony, Boucher explained: "The tip credit is vital to restaurants like mine. It allows employees to earn significantly more than the federal minimum wage while helping restaurants manage labor costs."
Boucher's full testimony is below. A stream of the hearing is available here.
The tipped servers and restaurant owners, with the support of the National Restaurant Association and the state restaurant associations, have won hard-fought battles to preserve the tip credit in 13 states and three municipalities this year alone. A recent survey of nearly 4,000 tipped workers in states facing tip credit elimination threats this year, found that nearly all (90%) of tipped employees prefer the current tip credit system over higher flat wage models while more than eight in ten (87%) feared their earnings would drop if employers were required to pay the full minimum wage amount.
FULL ORAL TESTIMONY OF TOM BOUCHER
CEO and Owner, Great New Hampshire Restaurants, Inc.
Before the House Committee on Education and the Workforce
Subcommittee on Workforce Protections
"Examining the Biden-Harris Attacks on Tipped Workers"
September 18, 2024
Chairman Kiley, Ranking Member Adams, and distinguished members of the Subcommittee, thank you for the opportunity to testify today. My name is Tom Boucher, and I am the CEO and owner of Great New Hampshire Restaurants, Inc. What began as one small restaurant in 1984 has grown into nine locations, employing 800 people and serving over two million guests annually. I am proud to say that we are celebrating our 40th anniversary this year.
In 1987, I started as a server at T-Bones, learning every aspect of the business from the ground up. This is not just my story-it's the story of thousands in our industry. The restaurant industry is unique because it provides upward mobility, offering opportunities for anyone-regardless of background-to start in entry-level positions and build lasting careers through hard work and dedication. Over 60% of Americans have worked in a restaurant, and 8 out of 10 restaurant owners, including myself, started in those same roles. The restaurant industry doesn't just provide jobs-it provides a path to success, offering opportunities for personal growth, financial independence, and entrepreneurship.
That said, running a restaurant isn't easy. Margins are razor-thin, and well-meaning legislation or regulation, if it doesn't account for the realities of our industry, can have serious unintended consequences. Today, I want to focus on two key issues affecting restaurants and their employees: the tip credit and the Department of Labor's 80/20/30 rule.
The tip credit is vital to restaurants like mine. It allows employees to earn significantly more than the federal minimum wage while helping restaurants manage labor costs. At my restaurants, servers consistently earn between $20 and $30 per hour, with some earning even more. No tipped server makes less than minimum wage, and they are protected by federal law to ensure that.
Our employees understand how important the tip credit is to their livelihoods. In fact, some of my employees launched a campaign called WeLikeOurTips.com to voice their support for keeping the tip credit intact. They know that eliminating the tip credit would limit their earning potential.
We've already seen what happens when the tip credit is removed. In New Hampshire, two restaurants switched to a flat hourly wage model, and their servers left for other restaurants where they could earn more through tips. Both businesses eventually closed. The very workers these policies are meant to help end up losing out.
Here in Washington, D.C., nearly 1,000 restaurant jobs have been lost after voters passed Initiative 82 to phase out the tip credit. A survey found that 86% of local restaurant operators believe the rising tipped minimum wage harms their operations, leading to increased prices, reduced staff, and closures. These are the real-world outcomes of policies that do not consider the unique needs of the restaurant industry.
Without the tip credit, labor costs for restaurant operators would skyrocket. We'd be forced to substantially raise prices, cut hours, or in the worst cases, shut down. The ripple effects would hurt local farmers, suppliers, and other businesses. When restaurants close, the entire local economy suffers.
In addition to preserving the tip credit, I'd like to address the Department of Labor's 80/20/30 rule. This rule restricted the amount of time tipped employees could spend on non-tipped tasks, creating unrealistic and unnecessary burdens. In the fast-paced world of restaurants, employees often switch tasks "on the fly." A server might reset tables, restock items, or roll silverware-all part of ensuring the best possible customer experience.
Tracking and limiting these tasks was not just impractical-it was impossible. Thankfully, the Fifth Circuit Court of Appeals struck the rule down, recognizing that it didn't reflect the realities of our industry. But we need to ensure that this kind of burden doesn't return. That's why we support H.R. 1612-the Tipped Employee Protection Act-to prevent the reintroduction of a similar rule. Flexibility is the backbone of restaurant operations, and we can't afford to lose it.
Chairman Kiley, Ranking Member Adams, and distinguished members of the Subcommittee, thank you again for the opportunity to speak with you today. In conclusion, I want to emphasize that the decisions made here have real-world consequences. The restaurant industry is a cornerstone of local economies, providing jobs, fostering community engagement, and offering pathways to economic mobility and personal success. The success of restaurants like mine depends on policies that allow us to operate sustainably and contribute to the local and national economy.
Eliminating the tip credit or reinstating rigid rules like the 80/20/30 rule would hurt employees, small business owners, and the communities that rely on us. I urge you to carefully consider the broader impact of these policies and protect the flexibility and structure that allow the restaurant industry to thrive.
Thank you.
About the National Restaurant Association
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises more than 1 million restaurant and foodservice outlets and a workforce of 15.5 million employees. Together with 52 State Associations, we are a network of professional organizations dedicated to serving every restaurant through advocacy, education, and food safety. We sponsor the industry's largest trade show (National Restaurant Association Show); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF's ProStart). For more information, visit Restaurant.org and find @WeRRestaurants on Twitter, Facebook and YouTube.
Vanessa Sink
[email protected](202) 331-5900