Server Not Servant

Saru Jayaraman, Fekkak Mamdouh, ROC United Leadership & Members: Is ONE FAIR WAGE really FAIR for All? Tip Credit & Tipped Minimum Wage-Part 1

By: Patrick Maguire

Book Chapter: Human-to-Human Service

Posted: 05/3/2018

It’s complicated.

On Sunday, April 22, 2018, I sent the email below to ROC (Restaurant Opportunities Center) United leadership.

The next day, on Monday, April 23, 2018, I received an email confirming receipt from Sekou Siby, executive director ROC United, indicating that someone on the ROC team would respond. People copied on Mr. Siby’s email included:

Saru Jayaraman, co-founder ROC United (saru@rocunited.org)

Fekkak Mamdouh, co-founder ROC United (Mamdouh@rocunited.org),

Teofilo Reyes, Research Director ROC United (teo@rocunited.org)

Jennifer Prescott, postion w/ROC United not listed on website (jennifer.p@rocunited.org)

My email with responses received from Fekkak Mamdouh  from ROC United on 4/29/18 are noted after each question:

T0:  Saru Jayaraman, Fekkak Mamdouh, Sekou Siby

CC: Yamila Ruiz, Legal Organizer ROC United (yamila@rocunited.org)

Subject: Opportunity to Respond to Patrick Maguire for Server Not Servant blog post on Tipped Minimum Wage

Hello, Saru, Fekkak, and Sekou-

My name is Patrick Maguire. I write a blog titled, I’m Your Server Not Your Servant advocating for service industry workers. I’m working on a blog post about the impact of gradually increasing, and ultimately eliminating, the tipped minimum wage as you are proposing, “Through the ONE FAIR WAGE campaign, ROC United is fighting nationally to eliminate the two-tiered wage system by raising the separate, lower minimum wage for those who work for tips in the restaurant industry to match the regular minimum wage, so that no one has to experience the financial insecurity, discrimination, and sexual harassment that comes with being forced to live off tips.”

I would appreciate it if ROC United leadership would consider reading and responding to the following items for inclusion in my blog post scheduled for release the week of May 1:

I live in Massachusetts, and the pending MA minimum wage legislation (House 2365 & Senate 1004) is what initially sparked my interest in this topic. Many restaurateurs and servers are understandably concerned about the impact of the legislation on their livelihoods. In addition to reading everything I can, I’m gathering information and perspective from several sources to present a thorough, balanced, and fair assessment regarding the proposed MA legislation and related issues. Two of the major issues that I will be addressing are the scenarios where servers in full service restaurants would take a pay cut, and the threat to the survival of independent, full service restaurants.

Theoretically, philosophically, and morally there is rationale to support why the idea of eliminating tipping makes sense. However, the practical implications of imposing an experimental ‘solution’ on a culture unwilling to embrace the change will adversely impact the earnings of many servers, and simultaneously threaten the survival of independent, ‘Mom and Pop’ restaurants. For those reasons, I am going to propose in my blog post that tipped minimum wages remain, and are set as a percentage of rising full minimum wage amounts. Further, I believe that the simplistic sounding, ONE FAIR WAGE ‘solution’ to the ‘living wage’ problem is far more complicated than ROC United and others make it sound. One size does not fit all. Legislation that might increase the pay for servers averaging $9/hr at a rural, national chain in the Midwest could simultaneously and significantly reduce the earnings of servers working at independent, full service restaurants in American cities where servers are earning a lot more than even ‘full’ minimum wage. I believe that we need to encourage local legislators to be more creative rather than imposing rigid, cookie cutter ‘solutions’ that just don’t work. I’d like to see ROC, NRA, RWA, RAISE Up (and other advocacy groups) consider a framework/compromise that is in the best interest of the diverse group of local workers, restaurants, and the customers they serve. We need more tiered solutions based on revenue, # of stores, # of employees, benefits provided, type of service, geography, median income, etc. I will encourage that creative collaboration in my blog post.

Considerations for Question #1:

Leslie Stahl interview with Sara Jayaraman on 60 Minutes Overtime on 4/15/18:

Leslie Stahl: “Jayaraman helped NY restaurateur, Danny Meyer come up with his policy of eliminating tipping entirely, building the cost of service into the bill and into every employee’s pay, but she says the real answer is eliminating the sub-minimum [tipped minimum] entirely.”

Saru Jayaraman: “The solution is so concrete and tangible. Pay these women an actual wage just like kitchen staff, just like every other industry. Let tips be on top of that as they were always intended to be. And let them actually not have to put up with anything and everything from a customer.”

[End of interview excerpts.]

Saru, I realize that your position on tipping may still be evolving, and that some of your quotes have been taken out of context. I also realize that you are most likely well aware of the initial failures of the Danny Meyer “Tipping Included” experiment. On 10/19/17, I posted the following message in my Server Not Servant Facebook Group with this piece from Grub Street attached:

On October 14, 2015 I posted in this group that “This (Danny Meyer’s implementation of a no-tipping business model) will significantly advance a movement that has been slowly gaining momentum the last few years.” My supposition was wrong. Two years after the initial announcement, Danny Meyer’s ‘Hospitality Included’ (no tipping) experiment is in peril. Excellent update from Keenan Steiner for Grub Street. I strongly recommend reading the entire piece, but here are a few excerpts: #1-“After Hospitality Included was introduced at Maialino in 2016, the entire front-of-house staff turned over twice with the exception of a few people. At North End Grill, a significant group of workers from both the front-of-house and back-of-house quit. At Gramercy Tavern, though many veteran servers have stayed, a good number recently decided that they couldn’t bear the pay cut anymore and that the situation was not going to improve.” #2-“We were very ambitious with our timeline,” Moran (Union Square Hospitality Group’s Chief Culture Officer) explains, “and we learned very quickly that this is much more challenging than we had anticipated.” And yes, it is noteworthy that Keenan (reporter) is a former USHG server.

3/13/14 Cal Alumni Association: In fact, she [Saru] says the bickering over raising the minimum wage is almost beside the point. “Ultimately, this system of tipping needs to go,” she says. “I can see a day when restaurant workers are paid like salaried professionals, make a livable wage for the region where they reside, and tips are a luxury on top of that. It’s our moment to set things in motion to make that happen in the years to come.”

#1- Given the above, what is the current ROC United position on the social contract, the custom of tipping in America?

Fekkak Mamdouh:  ROC supports One Fair Wage, which means better wages and better tips.[1] The seven states that have One Fair Wage – which means that restaurant owners pay their workers the full minimum wage and that tips are on top of the wage – have higher restaurant sales per capita, higher job growth among servers and other restaurant workers, and the same or higher rates of tipping.[2],[3],[4] All seven states have the same or higher tipping averages as the 43 states with lower wages for tipped workers.[5] According to PayScale, servers in San Francisco, California, with the highest wage in the country at $14 per hour, earn median hourly tips of $11.90, compared to $9.50 in NYC, and $8.50 in Washington, D.C.[6] That’s because customers do not tip based on how much the server earns in wages – most customers have no idea how much the server earns in wages.

ROC has been the leading voice defending workers’ tips as their own. In fall of 2017, the National Restaurant Association (NRA), which represents the Fortune 500 restaurant chains, pushed President Trump to propose a rule that would make tips the property of owners rather than workers.[7] The NRA has been lobbying to keep its workers tips for managers and owners for many decades. ROC led the fight against the NRA and this troubling rule, mobilizing 400,000 workers, employers and consumers to protect workers’ tips as their own. ROC won the battle against the NRA’s proposal to keep their workers’ tips, achieving a bipartisan Congressional bill in April that declares that tips should remain the property of workers now and forever.[8]

Patrick Maguire response: Fekkak, thank you for responding to my questions in a timely manner. I asked question #1 because it appears that the ROC position on tipping has evolved over the years, from denouncing the notion of the practice entirely, to now embracing tipping in addition to servers receiving full minimum wage. Is that because of the evidence that several ‘no tipping’ or ‘hospitality included’ (Danny Meyer-USHG) experiments are failing in America? In addition, you didn’t answer my original question:

Given the above, what is the current ROC United position on the social contract, the custom of tipping in America?

Wendyll Caisse-Treasurer and co-founder (RWA) Restaurant Workers of America response to Fekkak Mamdough #1:

RWA listens to real servers and bartenders across the country and we are looking at real people and businesses instead of misleading statistics. We assist independent restaurant operators with wage escalation proformas, so that they can see what’s coming with Saru’s experiments. Servers average over $30 an hour and bartenders $40 an hour. Our mission is to save lucrative tipped jobs that do not require a college degree, and preserve the full service dining experience as an option for all, not just the Hollywood elite or those with similar bank accounts.

On ROC’s website they list 200 restaurant member,s not 500. The 21,000 restaurant workers in NY, in addition to the 5000 in Maine, and not even counting our friends in Minneapolis, Seattle, D.C. and beyond – we outnumber ROC to a staggering degree. We talk about the math and we talk about the potential job losses and our voices are not paid to testify, unlike ROC. Saru and ROC supports unions, and it’s a symbiotic relationship as outlined in this 5/25/17 piece by Capital Research Center. From the piece:

Summary: “It began on the fringes of union activism. In just a few years, the campaign for a $15 an hour federal minimum wage—armed with the slogan “Fight for $15!”—has gone mainstream. And should this union-driven movement succeed, the result could be a lot of frustrated job seekers and shuttered businesses.”

Saru wants to eliminate tips: NYT Opinion 10/15/2015-Why Tipping Is Wrong by Saru Jayaraman

We at RWA believe that tips have normally been the property of the interfacing FOH staff–RWA does not have a board position on this rule. However, we would like to see some definitions of positions put into this language, as a ‘Shift Leader’ has not been defined by the DOL, and this is a pivotal position in transition to management, but should be a tipped position.

We believe the tipped model works, and our owners and tipped employees are allies in this position. We take offense at ROC saying we’re slaves that are helpless and abused. We are a STRONG restaurant family that will fight for keeping tips as part of the equation to ensure that our workers continue to make well above minimum wage and we save the experience of dining. Our customers enjoy tipping and it benefits servers.

#2- Saru, I don’t recall reading anywhere that you have ever worked as a tipped server. Have you?

Fekkak Mamdouh:  Saru has not, but I have worked as a tipped worker – delivery person, busser, and server – for more than 20 years. I have worked as a server in particular for over 17 of those 20 years. All of my fellow server colleagues from Windows on the World and the restaurants I’ve worked in support One Fair Wage. I am the co-founder of ROC United and co-lead the One Fair Wage campaign.

Wendyll Caisse (RWA) response to Fekkak:

Saru Jayaraman is a Labor Attorney with an agenda to unionize those who are not asking for it.

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Considerations for #3:

From the One Fair Wage link via (ROC) United website, “It’s time to do more than raise the tipped minimum wage. Through our ONE FAIR WAGE campaign, we will be advancing campaigns across the country to pass legislation in cities and states that will require the restaurant industry to pay all its employees at least the regular minimum wage.”

“One Fair Wage allows those who work in the industry to receive a fair base wage & their tips on top. We must make clear that One Fair Wage allows those who work in the industry to increase their overall income because tipping will still be allowed.” -(ROC) United website.

According to Andrew Farnitano of Raise Up MA, “ROC United has been a great partner of Raise Up MA on our campaign to raise the sub-minimum wage for tipped workers. We’ve relied on their expertise, research, and worker organizing throughout our campaign.” If the MA legislature does not address the tipped minimum wage issue to the satisfaction of Raise Up MA, they (RU MA) will move forward with a ballot initiative that incrementally raises the tipped minimum wage as follows:

1/1/19 $5.05

1/1/20 $6.35

1/1/21 $7.64

1/1/22 $9.00

1/1/23 Tied to CPI

Those numbers are significantly less than the proposed MA Legislation that incrementally raises the tipped minimum wage in MA from $6.75 on 1/1/19 to $15.75 on 1/1/25.

#3- What is the official ROC United position on the pending MA Legislation? Do you support the Legislation as proposed, or the more moderate Raise Up MA ballot numbers?

Fekkak Mamdouh:  ROC supports One Fair Wage – the full minimum wage for tipped workers, with tips on top. As mentioned above, the seven states that have One Fair Wage have higher restaurant sales per capita, higher job growth in the restaurant industry, and the same or higher rates of tipping as Massachusetts.[9]

Wendyll Caisse (RWA) response to Fekkak:

The restaurant industry normally has a 30% labor cost (with a tip credit model) – retail has 11%. To put forth ROC’s version of this measure that not only raises the minimum wage but eliminates the tip credit is an experiment that has never been done before. Full service restaurants will have a 400% cost increase in their server pay line item, to most operators, this is simply not feasible without making drastic labor cuts or automating. ROC has not done the math. We can make changes as owners, but it will be at the detriment of our staff. Changing from a full service model to counter service for example, would allow an operator to cut their FOH staff by 75%. Additionally, some urban, high end operators may succeed with a 40% menu price increase – but there is no financial evidence that this model is sustainable for independent, mid-priced restaurants. RWA has put forth an escalation model, that doesn’t even speak to PEOD (Price Elasticity of Demand) in menu price increases, it is beyond irresponsible that a national, well-funded organization like ROC, with $9.8 million in total revenue in 2016, can’t give a financial model of a 400% increase in the tipped wage in Massachussets from $3.75 to $15 that they are promoting. The following RWA financial forecast is based on RaiseUp MA’s proposed ballot numbers with a small tip credit ($6) and tipped minimum wage of $9/hour. ROC’s proposed $15/hr minimum wage (and NO tip credit) would have an even more devastating impact.

This model doesn’t ever consider an increase in rent. Restaurant owners want to know how they can operate – WHILE KEEPING THEIR STAFF – when labor costs increase from 30% to 49% when you only have 5% profit?!?

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Considerations for #4:

After the Maine legislature failed to act, in a ballot question in November of 2016, voters elected to eliminate the tip credit by 2024, bringing both the tipped minimum wage and regular minimum wage to $12/hour. After a period of confusion, restaurant servers, cooks, staff, and owners, along with vendors and other tertiary businesses, joined together in a grassroots campaign to reinstate the tip credit. After gaining momentum on social media, holding meetings and rallies, and appealing and presenting their case to state legislators, the campaign was successful. I have reviewed several of the documents used in the campaign, media accounts, and communicated with servers and restaurant owners. Some of the items they used in their argument included:

• Server tips and take home pay was lower because some customers were confused about the implications of the new minimum wage laws. There was a perception that customers didn’t need to tip, or could tip less because servers were now making much more money.
• Eliminating the tipped minimum wage by 2024 would result in a further decrease in net income to servers.
• The public was not ready to adopt a “tipping included” cultural shift.
• Serving is a “real job” that many folks choose and enjoy for a variety of reasons that work for them.
• ROC and other out of state lobbyists had no business imposing their agenda on the people of Maine who disagreed with the threat to their livelihoods in full service restaurants. And the lobbyists weren’t using realistic, sustainable, business models to make their case.
• Restaurants with normal debt service would face significant financial challenges to stay open. A full service restaurant cannot survive a 320% server labor cost increase from $3.75 in 2016 to $12 in 2024 without automating and/or cutting jobs and hours. From Wendyll Caisse, ME restaurant owner, and current RWA (Restaurant Workers of America) Treasurer in her testimony to Senator Volke, Representative Fecteau, and members of the Labor, Commerce, Research and Economic Development Committee: Let’s use $1M full service restaurant model for an example. A full service generally makes 5% profit. With the tip credit removal our labor percentage moves from an industry average of 30% to 49% in 2024 when servers make $12/hour. The 50K profit from 2016 transforms into a $145,216 deficit in 2024. That’s with no increases registered for COG’s (cost of goods) and NO MENU PRICE INCREASES, and not a penny for retained earnings which is extremely important in seasonal Maine.
• Projecting out to 2024 with servers making $12/hour, the prospect of finding staff willing to fill those positions was not good. One restaurant owner noted that in 2016 the average income for her servers working 30 hours/week was $44,850. At 30 hours/week at $12 in 2024, gross pay would be $18,720. Given the new cultural paradigm, tips above that could not be counted on.
• Raising menu prices to cover the additional labor cost meant running the risk that customers would stop coming or dine out less, especially folks on fixed income where even small increases have a big impact. If an egg salad sandwich goes from $4.25 to $5.75, that might be enough to keep guests from coming in.
• Eliminating servers and installing I-pads or order stations would obviously lead to a reduction of jobs and a less intimate hospitality experience.
• Service charges to potentially make up some of the income reduction to servers are not legal in Maine (unlike CA, Seattle, or Alaska).
• Exit strategies for restaurant owners (selling the joint for retirement) were more difficult because of the looming, prohibitive operating costs.
• Closing their restaurants might be their only alternative.
• The Maine Department of Labor recommended reinstatement of the tip credit.
• The packed, 15-hour, hearing in April of 2017, with hundreds of restaurant workers at the Burton M. Cross Building in Augusta was one of the best attended public hearings in Maine history.

#4- If eliminating the tip credit and implementing ONE FAIR WAGE is in the best interest of all servers, workers, and restaurant owners, why did LD 673 pass reinstating the tip credit after careful scrutiny by the Labor, Commerce, Research and Economic Development Committee (11-2 favorable vote) and a bi-partisan legislative vote for reinstatement in Maine? Shouldn’t the reversal in Maine send a loud and clear message to Massachusetts, New York, and all other states considering elimination of the tip credit and tipped minimum wage to slow down and thoroughly consider the implications before passing legislation or a ballot initiative?

Fekkak Mamdouh:  The people of Maine passed the One Fair Wage ballot measure in November 2016. More people voted in favor of raising the wages of both tipped and non tipped workers than either Presidential Candidate.[10] After it passed – and before it was implemented – the National Restaurant Association (NRA) spent significant funds lobbying to overturn the ballot measure.[11] The NRA is a highly funded trade lobby representing the Fortune 500 corporate restaurant chains. It has lobbied heavily in every state, including Maine, to keep wages for tipped workers as low as $2.13 at the federal level and $3 in Maine. Corporate interests should not overrule the basic needs of working people to survive.

Wendyll Caisse (RWA) response to Fekkak: 

As an active member in the Restaurant Workers of Maine, which was simply a Facebook Page started by a server by the name of Jason Buckwalter from Bangor; I can attest that we did NOT receive even a phone call from the NRA during our grassroots effort of 5,000 servers – and absolutely NO funding – we didn’t even have a bank account! The tipped wage information cited here for Maine is incorrect. After the referendum passed by a slim margin in November, many voters were not even aware of what they had voted for, as the elimination of the tip credit was 1 part of a 3-part question. The start of the wage escalation was implemented on January 1, 2017, the tipped minimum went from $3.75 per hour to $5.00 and the minimum wage went from $7.75 per hour to $9.00. The people most intimately affected by the loss of the tip credit were the ones asking for the reinstatement.

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Considerations for #5 +#6:

 I’ve spoken and communicated with several full service, MA restaurateurs who have run the hard numbers of escalating wages and costs. Many are very concerned about their ability to hang on, especially after an awful, extended winter. (One MA restaurateur just paid $6,400 in a penalty for their employees on MA Health Connector for 2017. That is in addition to what they pay for employees on their restaurant’s health insurance plan that has tripled over the last 8 years.) Given the business model realities of many restaurateurs, the prospect of eliminating the tipped minimum wage and paying all of their servers, bartenders, and tipped workers the full minimum wage threatens the survival of many independent restaurants. There are some folks in unique situations where they own the real estate their restaurant is located within, they have no mortgage or investors to pay, and no debt service, but those circumstances are rare. And some exist with unique financial resources such as grant money, donations, and/or wealthy benefactors. I’ve read a lot of ROC United’s published work, including some of the pieces put forth by the Food Labor Research Center at UC Berkeley where Saru is founder. In all of your work, I have not seen a viable proforma of how a ‘typical’ restaurant, with ‘normal’ debt service is expected to survive in a full minimum wage environment. I would love to see one with verifiable backup.

General Guidelines from Chron: According to Randy White, CEO of the White-Hutchinson Leisure & Learning Group, a consulting group, the cost of labor and food at a restaurant should ideally be less than 60 percent of the revenue you bring in. Labor should be less than 30 percent of the revenue. Depending on the type of restaurant you run, though, costs may be higher or lower. For example, if you run a full-service, white-tablecloth restaurant, your labor costs will most likely be higher than if you run a casual dining restaurant, since you will employ more staff to provide a higher level of service.

#5- If a restaurant previously had a tipped minimum wage of $3.75 (current in MA), and the tipped minimum wage went up to $15/hour, even gradually over 5-6 years, what would ROC United’s advice be to owners of FULL SERVICE restaurants (with servers, no automation) to keep Prime Cost under 60%? How much would an owner need to raise their prices to achieve 60% prime? Do you acknowledge the risk of your experiment and why so many restaurant owners are fearful of it?

#6- With the elimination of the tipped minimum wage and ROC United’s Fight for $15, what is the ‘new’ labor cost percentage goal if servers are making $15/hour?

Fekkak Mamdouh (Responses to #5 + #6): Restaurant owners in seven states – Alaska, Minnesota, Montana, Oregon, Washington, Nevada, and California – keep their prime costs well under 60%, and are thriving. The NRA’s data projects that these states will grow faster than the subminimum wage states.[12] California is home to some of the fastest-growing restaurant chains in the country; growth would not be possible without profit.[13] These seven states have higher restaurant sales per capita, higher job growth in the restaurant industry, and the same or higher rates of tipping.[14]

Even in New York, the tipped minimum wage has gone from $3.15 to $8.50 over the last several years, and most restaurants keep prime costs well under 60%. The New York restaurant industry has grown significantly over the same period that the tipped minimum wage has risen.[15]

We have 500 restaurant owners, many of whom are from the seven One Fair Wage states and New York state, who would be happy to share data on how they have managed to raise tipped workers’ wages, many to $15 an hour. All of those OFW states have a treasure trove of information on how to grow WITH their workforce that the Other NRA could share with restaurants around the country if they were so inclined. We invite restaurants to join RAISE and meet high road restaurateurs from around the country and discuss their business models. The National Restaurant Association has certainly spread fear among restaurant owners based on misinformation and calumny.

Patrick Maguire response: Fekkak, I would love to see the data from the full service restaurants in the 7 ‘One Fair Wage’ states operating at prime costs “well under 60%” that are “thriving.” Has this data been presented to the legislature, the Labor Committee and all parties currently negotiating in Massachusetts?

Wendyll Caisse (RWA) response to Fekkak:

To loosely say “One Fair Wage States’ is disingenuous, as all of the seven states have significant carve outs and lower minimums than any of the current legislation ROC is promoting. These states added language to make the financial model of full service restaurants remain viable:

• Alaska: Statewide minimum wage of $9.80 (See below).
• California: Minimum wage applicable to employers with 25 employees or less: $10; applicable to employers with 26 employees or more: $10.50.
• Minnesota: Large employer, an enterprise whose gross volume of sales made or business done is not less than $500,000, has a minimum wage of $9.50; a small employer, an enterprise whose gross volume of sales made or business done is less than $500,000, has a minimum wage of $7.75 as of August 2016.
• Montana: Business with gross annual sales over $110,000: $8.15; A business not covered by the Fair Labor Standards Act whose gross annual sales are $110,000 or less may pay $4.00 per hour. However, if an individual employee is producing or moving goods between states or otherwise covered by the federal Fair Labor Standards Act, that employee must be paid the greater of either the federal minimum wage or Montana’s minimum wage.
• Nevada: With no health insurance benefits provided by employer and received by employee: $8.25; with health insurance benefits provided by employer and received by employee: $7.25.
• Oregon: $9.75
• Washington: $11.

…..and this is the result even in Alaska at $9.80:

“BigRuss” on Apr 1, 15 at 1:40pm, (Commenter on Fodors.com travel site for Alaska, one min. wage state, at $9.80/hr):

“Anchorage and the Kenai Peninsula probably have more competition and more access to supplies than anywhere else in Alaska and the dining prices are 30-50% higher than what you would expect to pay in the lower 48; yes, even in NYC or San Francisco.”

ROC chose not to answer the second part of #5 above, “How much would an owner need to raise their prices to achieve 60% prime?” It’s between 20-40% depending upon how much an operator reduces staff, if an operator automates, the menu price increases would be closer to 12% (plus traditional inflationary increases) over the course of the Massachusetts escalation. It’s a math issue that will be absolutely unsustainable for our rural locations and customers on fixed budgets.

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Considerations for #7:

Leslie Stahl conducting an interview with Sara Jayaraman on 60 Minutes Overtime on 4/15/18:

Leslie: “… you can see that if you’re wanting to get a tip and a guy reaches out, you’re probably not going to slap his hand.”

Saru: “You have no choice. You’re living completely off your tips. You have to put up with whatever the customer does to you.”

[End of interview excerpts.]

That’s not true. In well-run restaurants (and all businesses), sexual harassment and inappropriate behavior from customers, employees, vendors, or anyone is not tolerated. Strong servers, managers, and owners take a stand, intervene, and follow up aggressively and thoroughly to protect the well being and rights of their employees. They are proactive and ensure that their staff knows how to quickly and decisively escalate a bad situation, and they make sure that communication and support systems are in place to follow up.

Erin Wade, co-founder and chief executive of Homeroom restaurant in Oakland, CA wrote an Opinion piece for the Washington Post on March 29, 2018 titled, I’m a female chef. Here’s how my restaurant dealt with harassment from customers. Here are a few excerpts:

“What’s needed is a conversation about women — not as victims, but as revolutionaries. I am an overtly feminist restaurateur, and harassment still happened at my restaurant. This is my story, my solution and my call to action.”

“Women of America’s businesses — please share your suggestions for solving the problems plaguing your workplace. This moment is ours — let’s take hold of it and make the world listen.”

From the Raleigh, North Caroline News & Observer on 10/26/17:

“In Raleigh, chef Ashley Christensen took to social media to call on restaurants to reevaluate kitchen culture, its reputation and its reality, and ensure environments are safe and respectful. In a statement posted on Facebook, Twitter and Instagram, she commended the bravery of the Besh Restaurant Group accusers and denounced the allegations.”

Quotes from Ashley’s social media from within the piece:

“The issue of sexual harassment is extremely important to me, to my company, and to the industry as a whole.”

“We also have a great HR director, who we hired about 18 months ago, and her guidance has been invaluable. She is directly available to all of our staff to address any of their concerns, positive or negative. Additionally, our managers will direct employees to her if they feel we’re anywhere close to a topic that may require her skill set. I think it’s almost impossible as a business owner to review situations between employees in a truly neutral manner, and having a skilled HR director allows us to provide that resource and safe zone to our team. Everyone deserves that. I think many independent restaurant owners view investment in an HR presence as too costly. I have to say, I think it’s the most important investment we’ve ever made.”

“I applaud the women who came forward and admire the bravery that it took to do so. While these reports are difficult and disheartening and confusing, I’m grateful for the spotlight that it’s shining on the work that needs to be done. Lewd language and behavior is so often overlooked or tolerated in restaurants and as leaders, we have to take the steps to cleanse our industry of this. I think even the most engaged, well intentioned hospitality groups out there can probably find opportunities to be better, safer, more respectful. So let’s get to it.”

Dawn Lafreeda, owner-operator of Den-Tex Central, which owns 81 Denny’s restaurants in an Opinion piece in the Wall Street Journal on 4/12/18:

Don’t Blame Tips for Sexual Harassment – Waitresses see gratuities as a great feature of the job.

From the piece:

For years I was told that running a full-service restaurant was a man’s game. I still remember the response from the banker I approached in 1984 to open my first company account: “Young lady, are you sure you’re not the waitress?” I was a waitress at one time—saving my tips and maxing out credit cards to buy my first restaurant—but not that day.

A lot has changed. Today I’m the owner-operator of 81 Denny’s restaurants across the South and Midwest. I don’t get many double-takes when I try to open a bank account, but I still encounter people who suggest women can’t fend for themselves in the restaurant industry.

Consider the claimed link between sexual harassment and tips. Because female servers earn most of their compensation through tip income, the narrative goes, they’re forced to put up with bad behavior from customers. We’re told that women are powerless victims, so dependent on the customer for their next dollar that they’ll tolerate any boorish behavior.

But that doesn’t describe the thousands of women I work with. Servers in my restaurants, especially women, don’t see tip income as a drawback. It’s a great feature of the job. Having cash at the end of the day—and not just on payday—helps a lot. Bad behavior is an occasional problem in any industry, but blaming the tipping system insults millions of women who benefit from it.

Yet some want to do away with tipping. New York Gov. Andrew Cuomo is considering a proposal to eliminate the lower minimum wage for tipped workers. This could lead to the end of tipping.

The theory is that replacing tips with a higher base wage will reduce sexual harassment. In reality it will result in less take-home pay for a large section of the hourly labor force. New York restaurateurs have already learned that lesson the hard way. Servers are fleeing restaurants that try higher base wages in lieu of tips. Some 97% of restaurant staff prefer the status quo to a tipless alternative, according to data from Upserve. Even a base wage of $20 an hour wouldn’t compensate many servers for the income they would lose if tips disappeared.

Forbes Magazine published a piece by Michael Saltsman of the Employment Policies Institute on 3/6/18 titled, Sexual Harassment Is Awful. But It Has Nothing To Do With Tipping.

From the piece:

“(Restaurant Opportunities Centers United (ROC United) is a controversial labor advocacy organization with its own history of alleged bad behavior; it was even sued by its own employees for illegal firings. But ROC’s profile has been rising in recent years, with celebrities such as Jane Fonda and Amy Poehler embracing its cause (if not the restaurant servers that ROC claims to represent).”

“Some version of ROC’s “tipping = harassment” claim has been repeated hundreds of times by ROC, its surrogates, and reporters who apparently believe it’s too good to check. But the errors are numerous, and start with the fact that ROC doesn’t even cite its own research accurately. (I reached out to ROC and offered its team the opportunity to comment on this and other critiques of its report, but did not hear back.)”

“This column has previously debunked the dubious economic benefits of raising the tipped wage. And the analysis above makes clear that the sexual harassment angle is equally flawed. If servers oppose the “raise,” and there’s no good policy rationale, the question remains: Why would policymakers propose changing such a beneficial and widely-favored status quo?”

#7- Saru, Fekkak, Sekou, and ROC United leadership- I believe that commingling the issues of sexual harassment and server compensation (via tipping and tipped minimum wage) is a strategy being employed by ROC United (with cherry picked data) to mislead and exploit the very people that you are claiming to be advocating for. And many of the Hollywood folks jumping on the morality bandwagon are enjoying the optics of the crusade, but are misinformed and unaware of the crucial details (and math) of how a cause they claim to be champions of could actually harm many individuals and small businesses. There should be more time, effort, and energy focusing on facts, education, and compromise to benefit servers and all workers rather than all of the divisive rhetoric against ‘rival’ lobbying groups. I welcome your response to my statements and anything cited above following question #6.

Fekkak Mamdouh:  There are now multiple sources of research and investigative journalism that corroborate that a mostly female workforce of tipped workers (two-thirds of tipped workers nationally are women) having to rely entirely on tips for their income subjects them to sexual harassment from customers, co-workers and managers. We surveyed 688 workers nationally on the issue; nearly 90% said they experienced sexual harassment as a result of having to tolerate inappropriate customer behavior to feed their families in tips.[16]These workers reported that because co-workers and managers knew that the women in tipped positions relied on them to earn their income in tips, these co-workers and managers had the power over these women to exact sexual favors. These workers also reported that managers told them to ‘dress more sexy, show more cleavage, and wear tighter clothing’ in order to please customers and earn more income in tips.

Workers in the seven One Fair Wage states reported experiencing sexual harassment at half the rate of the states that require restaurant owners to pay the subminimum wage of $2.13 an hour. Workers in these states reported that because they received a full wage from their employer, and tips were on top of that wage, they did not have to tolerate anything and everything from customers in order to feed their families entirely in tips. Workers in the seven One Fair Wage states also reported that managers told them to dress more sexy, show more cleavage, or wear tighter clothing in order to make more money in tips at one third the rate of states that only require employers to pay the subminimum wage of $2.13 an hour. Again, women in the seven states have wages in addition to tips, and so they do not have to accept disrespectful behavior to receive income.

We conducted this research because so many women servers and tipped workers came forward to us and shared their stories of sexual harassment in the industry, and how their experience of sexual harassment was directly connected to having to live entirely off of tips rather than receiving a wage from their employer with tips on top. Most of the celebrities working with ROC worked as servers and tipped workers in their youth and experienced sexual harassment themselves as tipped workers. So our campaign is based both on a great deal of research and facts and the lived experiences of millions of women and men across America.

Patrick Maguire response: Fekkak, you painstakingly provided 18 footnotes for several items, but did not provide any to support your opening comments, “There are now multiple sources of research and investigative journalism…” 

Please provide a copy of the survey and the method of choosing the 688 workers that you mentioned above.

Wendyll Caisse (RWA) response to Fekkak: 

The perpetrator of harassment bares the sole responsibility of their deviant behavior because to point blame on the compensation system removes the blame from the accused. Sexual harassment is a cultural problem that we are finally beginning to address, and if solving this social issue was as easy as a wage discussion, on street harassment wouldn’t be the most prominent situation that harassment is experienced in. RWA in no way acknowledges any ‘reports’ executed by ROC because of their flawed methodology, such as using IP addresses for the One Wage states vs. doing focus groups and interviews. Additionally, we at RWA hold their interviewer training and interviewer ‘drawing’ techniques as highly suspect. This is from ROC’s interviewer training manual:

Fekkak states above that 90% of their respondents had experienced sexual harassment, but in reading their ‘report’ they include everything from off-color jokes to being asked out on a date, and this 90% also includes management, as I said, their ‘research’ is not viable. With all of this, the numbers are naturally inflated from, say, what would be reported to the EEOC. They also lump responses from current and former restaurant workers. Also, oddly in this same ‘report’ here’s this direct quote on page 10, “ROC United has gathered over 5,000 surveys of restaurant workers around the country examining wages and working conditions.*(42)* Over ten percent of workers surveyed reported that they or a co-worker had suffered from sexual harassment.”

*(footnote 42)*  ROC-United analysis of National Behind the Kitchen Door (BKD) Database, 2014

I would say this means that ROC has spent a lot of time and money crafting language in their boilerplate reports that suit their agenda, but happily for the millions of workers in the restaurant industry, ROC has found that close to 90% of the workers surveyed have never suffered from sexual harassment, nor have their co-workers.

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Considerations for #8:

From Politico’s Morning Shift Newsletter on 3/29/18:

TIP TIFF IN NEW YORK: A pro-tipping restaurant organization attacked supporters of a plan by New York Governor Andrew Cuomo to end the state’s lower tipped wage. “Thank you for your concern. But we don’t need your help, and we’re not asking to be saved,” said the Restaurant Workers of America, a group that opposes ending tip credits. The group was responding to a letter sent last week by 16 prominent film and TV actresses (including Jane Fonda, Reese Witherspoon, and Natalie Portman) that urged Cuomo to raise the minimum wage for tipped workers. The letter said that tipping results in higher rates of sexual harassment in the restaurant industry.

But the RWA contends the actresses were “misled” by the Restaurant Opportunities Center United, a worker advocacy organization, into believing restaurant workers are “helpless victims of sexual harassment.” ROC United President Saru Jayaraman accused the RWA of being backed by the National Restaurant Association, and pledged to furnish proof next month. But both the National Restaurant Association and Restaurant Workers of America  denied any financial ties between the two organizations. “Once again ROC is wrong. … The National Restaurant Association has never made financial contributions to Restaurant Workers of America,” said Cicely Simpson, a spokesperson for the National Restaurant Association.

#8- Has the pledge to furnish proof of the accusation that RWA is being backed by the National Restaurant Association been followed up on by Saru or anyone at ROC United?

Fekkak Mamdouh:  Restaurant owners who are part of the National Restaurant Association funded the launch of Restaurant Workers of Maine, which then launched Restaurant Workers of America. The RWA has admitted it receives no money from restaurant workers, only restaurant owners.[17] The NRA funds the RWA to travel around the country to oppose higher wages for restaurant workers.[18]  (Fekkak Mamdough footnotes are included at the end of this blog post.)

Wendyll Caisse (RWA) response to Fekkak:

While some of the above answers are disingenuous, this response is a patent lie. The Restaurant Workers of Maine was simply a Facebook group of 5,000+ servers, started by a server that received ZERO funds and never had a bank account. The RWA is not funded by, nor connected to, the NRA. As the Treasurer of this new 501c4, I was happy to see numerous $1 and $5 membership fees coming in from tipped servers across the country; there have been no deposits from the NRA. Again, ROC has made another false statement; we HAVE received funds from restaurant workers. Through the generosity of our restaurant community, our board members have been able to enjoy low travel expenses due to people offering rides, couches, and meeting accommodations at no cost to us.

Summary response from Wendyll Caisse (RWA):

I need to highlight a few extremely-concerning false statements that ROC made. ROC dismisses our grassroots victory in Maine by suggesting the National Restaurant Association spent “significant funds” to undo it. If you look at their source for this claim, it doesn’t even support it — it’s a FEB 2016 newsletter  that relates to a minimum wage ballot measure in the city of Portland. In February 2016, the statewide initiative wasn’t even qualified for the ballot yet! So it’s unclear to me how ROC can justify its claim about something in 2017 using a Feb 2016 newsletter.

“After it passed – and before it was implemented – the National Restaurant Association (NRA) spent significant funds lobbying to overturn the ballot measure.[11]”-Fekkak Mamdough ROC United

Wendyll Caisse: The tipped wage information sited by ROC for Maine is incorrect also. After the referendum passed by a slim margin in November, the start of the wage escalation was implemented on January 1, 2017, the tipped minimum went from $3.75 per hour to $5.00 and the minimum wage went from $7.75 per hour to $9.00.

This section below is what’s most concerning to me. While I’m flattered that ROC is apparently tracking our activity very closely, it’s frankly insulting that they would make such false claims and expect no one to question it.

“Restaurant owners who are part of the National Restaurant Association funded the launch of Restaurant Workers of Maine, which then launched Restaurant Workers of America. The RWA has admitted it receives no money from restaurant workers, only restaurant owners.[17] The NRA funds the RWA to travel around the country to oppose higher wages for restaurant workers.[18]” -Fekkak Mamdough ROC United

Wendyll Caisse (RWA):

Let me be clear:

1) No one “funded” Restaurant Workers of Maine — we didn’t even have a bank account! Servers and owners each chipped in where necessary to cover signs, buttons, t-shirts, etc –that’s it. We did what we did without funding.

2) We never said we receive “no money” from restaurant workers, and the article ROC links to doesn’t say that, either. In fact, even though we waived servers’ dues for the first year, we’ve nevertheless had a number of employees who’ve voluntarily chosen to join as paying members because they support our cause so strongly.

3) This statement — “The NRA funds RWA to travel around the country to oppose higher wages for restaurant workers” — is categorically false. I’m the treasurer of RWA, and I’d know if we were receiving support from the NRA. We’re not — zip, zero, zilch, nada. Amusingly, ROC gives a 2017 citation to support this — and we didn’t even launch our group until 2018.

Response to Fekkak Mamdouh’s answers from Massachusetts Restaurant Association:

Stephen Clark-Director of Government Affairs MRA (sclark@themassrest.org) and Bob Luz-President & CEO MRA (BLuz@themassrest.org):

ROC, which is funded by national labor unions, continues to mention Fortune 500 companies and a $2.13 federal tip wage. The reality is that less than 2% of tipped employees in Massachusetts work for a company on this list (a list made up of some of the largest companies in the world, not the Sunday morning diner, the local Friday night dining spot or even the lunch place that just opened that you have been meaning to try). The Massachusetts restaurant industry is made up of small, independent restaurant owners and these are the restaurants on Main Streets in every town in Massachusetts.

 The Massachusetts tip wage is currently $3.75, and each tipped employee is guaranteed to earn a full minimum wage (currently $11/hr) for all hours worked. The tip wage allows the highest percentage of employees in a restaurant to earn the highest average wage, with many tipped servers earning in excess of $25 or $30 per hour. Massachusetts tipped employee wages have increased 84% in the last 15 years and currently has among the highest tipped wage earners in the country (hourly tip wage + declared tips), topping even California which has no tip wage. Any increase in the starting wage automatically increases server wages. Whenever an operator is forced to increase menu prices, the amount left for a tip increases as well. There are 80,000 tipped employees in our state that choose to work in our local restaurants and they are not asking for the change, they understand the economics of a restaurant and recognize they are maximizing their earning potential under the current system.

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Future items for discussion beginning with Tipped Minimum Wage-Part 2:

General Topics:

• Follow up on every item in Part 1.
• Proof of who is telling the truth and who is lying to their ‘constituents,’ the public, and why.
• “Follow the money” of all lobbyists and advocacy groups. What is their true motivation and ‘end game?’
• Timing of MA legislative action and ballot initiative.
• Definition of “Tip Credit.”
• Political, ‘Think Tank’ machines with financial, self-fulfilling motives vs. bare bones, grass roots initiatives.
• Unintended, counter-intuitive consequences of proposed advocacy of workers. Lower net compensation, reduced staff shifts/hours, less full service restaurants.
• Public records, including salaries and expenses of all non-profits involved.
• Deep dive into data of 7 ‘One Fair Wage’ states. (Include discussion of state-specific service charges, admin fees, etc. in comparing states.)
• Math/ financial models of real MA restaurants and the impact of proposed changes. How will independent, full service restaurants thrive, not just survive? Can a creative compromise work?
• Math, data, and facts from as many resources as possible.
• Breakdown restaurant types from no service, no tips/casual to full service, full liquor, fancy. One size does not fit all. Let operators adopt what works for their business.
• ‘Celebrity’ crusaders. What exactly do Jane Fonda, Lily Tomlin and others know, and what are their sources of information?
• Lack of media coverage/awareness of the details in Maine before ballot vote. Preventing the same outcome through education in MA, NY, and elsewhere. Simplifying the message.
• PEOD-Price Elasticity of Demand. Statistics on impact of increased menu prices and what the public will tolerate.
• Educating the public about the realities of the low profit margins for independent, full service restaurants.
• New MA EMAC (Employee Medical Assistance Corp) supplemental tax for restaurants up to $750 per employee per year.
• Higher minimum wage raising all other hourly wages at the restaurant.
• Increased minimum wage taking money away from fairly compensating other staff, as well as restaurant improvements.
• The gradual increase only prolongs the agony before the demise of independent, full service restaurants.
• Restaurateurs have already been aggressively reducing costs every way possible. Don’t tell them they need to start now.
• Comparison of revenue per employee for small businesses (5-10k) vs large companies.
• Creating a fair and reasonable legal framework and let the entrepreneurs and the free market decide what works best for individual operators.
• Specific actions workers and restaurateurs can take to advocate for their income and livelihoods.
• Alternative creative solutions if MA legislature doesn’t act and ballot question fails. (Matt Mazzotta’s proposal.)
• Break RaiseUp MA ballot question into 2 parts, full minimum vs. tipped minimum?
• Cambridge, MA cafes closing earlier due to labor costs. Boston Globe 9/26/17.
• Boston Globe, 10/24/17-Dudley Dough in Roxbury, MA and lessons learned about labor costs.
• Globe Magazine–The Citgo Sign Has a Dark Side. Should Boston Care? Commingling the social contract of tipping with slavery.

ROC United:

• Salaries, travel, office and lobbying expenses, and grants for ROCU listed on form 990, including 2017, when available.
• Food Labor Research Center at UC Berkeley (Salaries, data ‘gatekeeper,’ does public access to all data and methods?)
• NYT “Dear Sugars” Podcast 3/24/2018 (Data to support claims about 7 states that ‘did away’ w/tipped minimum wage. IHOP, Applebees, Denny’s, and Olive Garden Workers vs. tipped workers at independent restaurants. “Systemic situations of structural power, story at the end of the podcast empowering staff and strong leadership.)
• Union affiliation/support? Is unionizing restaurant workers the end game?
• ROC dues from individual worker members and restaurants.
• Jennifer Schellenberg (RWA) in Washington Examiner on 3/12/18 on union dues and membership motivations.
• Response to Wendyll Caisse (RWA) financial projections for MA restaurants 2108 vs 2024, “The MA Tip Credit Protects Jobs.” ROC projections/proforma vs. RWA forecast?
• Julia Tavlas Capital Research Center piece dated 8/2/2013.
• Comingling of issues to support the cause (Tipping, slavery origin, sexual harassment, bullying, power dynamics.)
• Morality play/extremism of celebrity PR.
• The crusade vs reality. Imposing what works for some with the moral high ground and guilt.
• The history, operating model, and funding of COLORS restaurants.
• EEOC (Equal Employment Opportunity Commission) stats vs. ROC stats, interview methodology, and demographics of participants. Rhetoric vs. reality.
• Bureau of Labor Statistics median vs. mean and inclusion of tipped non-restaurant workers to skew the data.
• Real restaurants. Real math. Working financial models and proof that eliminating the tipped minimum wage is the best model. This should be the foundation of the discussion.

RWA (Restaurant Workers of America)

• Wendyll Caisse financial projection 2018 vs 2024, “The MA Tip Credit Protects Jobs.”
• Financial models of real, operating restaurants redacting names to protect identity. Real math and the projected impact. Let’s compare all of the models in MA and every state before moving forward with legislation or ballot questions.
• Initial perception of servers that they would benefit from the change vs. reality. Misconception of “higher base pay = more money.”
• Maine People’s Alliance and Maine Small Business Alliance in Maine. Fact vs. Fiction
• Member dues and funding.

NRA (National Restaurant Association):

• Responses to items in Part 1?
• Financials, member dues, and funding.

MRA (Massachusetts Restaurant Association):

• Additional responses to items in Part 1?
• Financials, member dues and funding.

Raise Up Massachusetts:

• Response to items in Part 1?
• Financials, funding.

The Alliance for Business Leadership

• Response to items in Part 1?
• Awaiting response from Nai Collymore-Henry
• Finances and funding.

Servers, restaurant industry workers, and owners interested in supporting industry brothers and sisters in the fight to preserve the tip credit should follow and support the work being done by Restaurant Workers of America-RWA, and share their website, Facebook page, Twitter, and Instagram platforms with your restaurant colleagues and everyone in your network willing to support you.

Stay tuned for Part 2. Feel free to join the conversation in the comments below, or email me at patrick@servernotservant.com with tips, information, and/or recommendations for future posts.

If you are interested in supporting the Server Not Servant blog and bringing the book project to fruition, please see the blue box on the right hand side of this blog post. Thank you –Patrick Maguire

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Fekkak Mamdouh Footnotes:

[1] Restaurant Opportunities Centers United (2018). Better Wages Better Tips.

[2] National Restaurant Association (2017). 2017 National Restaurant Association Restaurant Industry Outlook.

[3] 2011-2016 data for 722511 number of full service restaurant workers. Bureau of Labor Statistics. Quarterly Census of Employment and Wages.

[4] Average tipping rates for all states in 2016 and 2017 using Square data based on millions of observations. See Ferdman, R.A. (March 2014). Which US states tip the most (and least), based on millions of Square transactions. Quartz.; and Johnson, D. (August 2017). Find out which states give the worst tips. Time.

[5] Ibid.

[6] PayScale (2015). Best and Worst Cities for Food Service Workers.

[7] Fu, J. (February 2018). The Department of Labor’s tip-pooling proposal is a mess. The New Food Economy.

[8] Strong, A. (March 2018). Restaurant Owners and Managers Cannot Keep Servers’ Tips Per New Budget Bill. Eater.

[9] See note 1,2,3,4.

[10] Chin, B. (January 2017). Ditching personality politics for bold policies is how to win working class, rural Maine. Maine Beacon.

[11] Maine Innkeepers Association (February 2016). Legislative Happenings. INNterviews.

[12] See note 2.

[13] Technomic (2018). 2018 Top 500 Chain Restaurant Report.

[14] See notes 1, 2, 3, 4.

[15] Institute for Policy Studies & ROC United (2018). New York Saw Boost in Restaurant Worker Wages and Employment after Tipped Minimum Wage Increase.

[16] ROC United & Forward Together (2014). The Glass Floor: Sexual Harassment in the Restaurant Industry.

[17] Romeo, P. (February 2018). Restaurants Find an Ally in their Fight to Keep the Tip Credit: Servers. Restaurant Business Online.

[18] National Restaurant Association (2017). 2017 U.S. Restaurant Government Affairs Conference: Protecting America’s Industry.

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