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Minimum Hike for Tipped Employees Still in Limbo

Sept. 10, 2005 — Hotel and restaurant workers who make tips as part of their compensation may receive financial relief if a bill going through the Senate is approved. Some employers, however, see this measure as something that eventually will put them out of business.
Under the current law, businesses with gross receipts less than $150,000 annually are exempt from the requirement to pay minimum wage to their employees. This bill, sponsored by Sen. Celestino A. White Sr., removes tipped employees from this exemption, thus requiring employers to pay them minimum wage.
"Anyone working in the tip industry right now can have their employer take their tip and use it to pay their salary," White said. "If the minimum wage right now is $5.15, for example, an employer can pay their employees as low as $3.15 an hour then use their tip to pay the rest. That's not right."
White added that since the cost of living is so high in the Virgin Islands, this practice hurts workers who need to "put food on the table" for their families.
"If we don't pass this bill, which many of my colleagues seem reluctant to do, then we are in fact promoting social poverty," White said. "To ask a person to give service for such a menial wage is criminal."
Peter Francis, a bellhop at the Marriot Frenchman's Reef Hotel on St. Thomas, tends to agree. "This is a seasonal business. If we have slow days, then I barely make anything at all. That's why we all have to work two or three jobs—we have families to provide for, things we want to do with our lives. This bill is long overdue."
Francis also said it is very rare to see a raise in pay, even though Frenchman's Reef is one of the larger and more profitable hotels on St. Thomas. "We may get a 25-cent raise over a three-year period, and after taxes, it's like ten cents. We're already making less than minimum wage—it's time to think about the people who are suffering."
However, many employers say they do care, but just can't afford the financial setback if such a bill is passed. "This really has the ability to put someone in the hole," Natasha Stone, part owner of Mafolie Hotel on St. Thomas, said. "We pay our staff four dollars an hour, and they probably make about four more in tips. That's eight dollars an hour, so they make above minimum wage. Some of the hotel and restaurant owners can't afford to pay much more than that."
"It really is a 'catch 22'," Unise Tranberg, owner of Pier 69 Restaurant in St. Croix, said. "These workers do deserve minimum wage, but it's going to put a dent in a lot of businesses in the territory—especially in St. Croix. If this bill is passed, it's going to increase a lot of expenses for people, and it will be hard for us to sustain ourselves."
As a suggestion, Tranberg said White may want to give such smaller businesses tax exemptions so the extra money can go to the employees. "People keep raising the expenses of running our businesses, but put nothing out there to create a stimulus for the economy. We should get tax breaks if this is going to happen."
Gladys Jones, owner of Gladys' Café in St. Thomas, had the same thing to say. "I'll tell you, if we don't get those exemptions and have to comply with this bill, it's going to work out poorly for my employees. I'll have to be cutting shifts, hours, sending them home. That isn't fair to them, and it isn't fair to me running a small business when many days are so slow."
When asked about the bill from this perspective, many waiters and waitresses across St. Thomas said that cutting down on work hours would make things even more difficult for them to survive. White said he didn't think of that.
"A proviso clause should be added to the bill to include small business employers, so that this doesn't affect them badly. I know St. Croix especially is suffering, and we don't want to put our businesses out of business."
White further said the implementation of a wage board would also greatly improve the situation. "This is something they could handle, with everyone's input. Then all the bases would be covered. But we've been mandated to have the board up and running for a number of years and nothing's happening, so I had to do something."
Another one of White's bills, to increase the minimum wage to $6.15 per hour starting Jan. 1, 2007, was not as controversial. Indeed, many businesses said they could handle the increase, especially since the wage is being increased incrementally—50 cents in 2006, and 50 cents more in 2007.
"That works for me," Angela Rowlins, manager of Bunker Hill Hotel on St. Thomas, said. A much smaller business, Bunker Hill actually pays all of its staff minimum wage. "The other bill is good too…it something that employees really need."
Palms Court Haborview hotel in St. Thomas does business a little differently, however. While employees do make minimum wage, they receive very little in tips. "We get paid for the hours we work," Mavis Gordon, server, said. "The only time we get tip is when guests come and we have to set food out for them or something. Raising the minimum wage would definitely help us out."
While the bill raising minimum wage passed the Senate Rules and Judiciary Committee last Thursday, the bill which caters to tipped employees is still being held in committee. "I really hope it passes through," White said. "I know our people deserve to have all the money they're working for."
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