Higher Wages and Tipless Service: How Six Portland Restaurateurs Prepare to Cope

In February, Oregon passed a law that would raise the minimum wage in the Portland area to $14.75 by 2022. Then, just two weeks later, the U.S. 9th Circuit Court of Appeals ruled that restaurant owners in the United States cannot force servers to share their tips with back-of-the-house (BOH) employees, like cooks.

Seemingly, the new laws solidify a wage-inequality situation in Oregon long bemoaned by cooks and chefs, who ask, Why do waiters often make twice or three times as much as us? Oregon restaurant owners are finding it difficult to hire and keep talented cooks, and at the same time, they must prepare to pay all of their employees higher wages. In turn, you potentially face price hikes and less consistent food, due to regularly changing kitchen staff, at your favorite restaurants.

Waiting tables is different in Oregon than in many states. In Oregon, restaurants must pay their waitstaff minimum wage, whereas, in other states, waiters are paid a lower wage—New Jersey, for example, pays waiters $2.13/hour—€”with the understanding that tips will make up the difference; if not, restaurants must pay the difference to their waiters.

To get a glimpse into how the Portland dining scene might change due to the recent legalities, Eater asked restaurant owners what they plan to do to keep their employees, their guests, and themselves happy. Here's what they have to say.

Rick Gencarelli

Lardo, Grassa

I'm in favor of a livable wage, especially when the housing market is making it very difficult for people making $9.25 per hour to find affordable housing. But I have some concerns. Increasing minimum wage without a tip credit doesn't allow much room in labor percentages to incentivize hard-working employees. Why would you take a job with more responsibilities where you're only paid a dollar more than the business's lowest paid employee?

I'm also concerned with the inevitability of across-the-board price increases. People have come to expect high quality for very reasonable prices. The new [minimum wage] legislation feels pretty frightening for a small business owner.

Scott Dolich

Park Kitchen, The Bent Brick

Cooks, porters, dishwashers, managers, owners, and investors are very steamed about this ruling. The people who seem to be ok with this ruling are lawyers and waiters. There are other restaurants that want to keep tips in some form and create another mechanism to distribute them to the BOH and dishwashers. In order to be compliant with the new ruling, these restaurants are considering adding separate tip lines for the front-of-house (FOH), BOH, and dishwashers. Seems a little confusing to me, but it might work well for some establishments.

Bryan Steelman

¿Por Qué No?

"If the erroneous decision by the 9th Circuit Court to disallow tip pooling in Oregon restaurant stands, then the only path I see forward to keep wages equitable between the service staff and the kitchen staff is to eliminate tipping. In my mind, it is less a question of "if" and more of a question of "when" that will happen, and you are already seeing restaurants in Portland and other cities move to this model.

I think that in the grand scheme of things, this will be a positive movement for everyone, including employees, employers, and customers. It will be positive because it will allow for more equity and take away that uncomfortable moment of filling out a tip line. When it's all said and done I think that I will be thankful that tipping will probably be going away. I just hope that there aren't too many bumps and bruises for all of the amazing independent restaurants in Oregon, because we have something very special!

Jenny Nickolaus

The American Local

The law [regarding shared tips] has been in place for a long time and the court case just solidified it. Technically, we are not allowed to mandate how servers deal with their tips at all (including tipping out bartenders, bussers, hosts etc...). At The American Local, we circumvent that by having our servers vote. Once they've agreed to share tips, it's a non-issue. But if you get new servers, you need to make sure they're on board with it.

It is interesting because I know why the law is there, to protect servers from unscrupulous managers and owners who would take the servers' tips for themselves (I personally had to deal with that when I was a bartender/server), so the law in essence says, once the server is given the tip, it is theirs to do with as they please (and management can't dictate where it goes). My servers understand that this is a team effort and if they don't tip out, they aren't helping the team, which means the team probably won't be helping them, so I feel a little removed from the pettiness of the lawsuit.

Daniel Shoemaker

Teardrop Lounge

[On the U.S. 9th Circuit Court of Appeals' decision on tip sharing] That's a terrible ruling! I would imagine line cooks everywhere are up in arms. I think there's only one answer, which is to increase kitchen hourly wages as much as possible. What's ironic is, this will be the tipping point (pun very much intended) that causes pooled-house legislation, causing all employees to share the tips. We're seeing everything trend this way, but I bet this squeaky wheel just upped the ante.

[As for the minimum wage increases] We've known this was coming for quite some time, so there's been ample opportunity to ramp up in anticipation. As an avowed socialist myself, I've been paying above the minimum wage for years to scale in that direction. Yes, prices will need to increase marginally, and I don't think the public is naive about that. But additional service charges, like what San Francisco began implementing with the insurance mandate, have the possibility for backlash. I believe it needs to be more seamlessly woven into our own infrastructure.

Paul Mallory

Higgins

We do not have issues with it really. I have never mandated tip allocation. The tip is essentially all for the waiter. But, I have set up guidelines that educate the staff of the importance of support people.

Bussers, food runners, bartenders, cooks, and dishwashers all work hard to achieve one goal: happy guests. Could you as a server make that happen on your own? If the answer is no, then your tip is yours artificially. Should you choose going rogue, good luck, as fellow staffers will not want to work with you. Then it becomes more about you, the server, not working well with others, and I step in. Besides that, most people want to be a part of the team mentality and do realize that it really is not all their money.

Related Reading

Park Kitchen and The Bent Brick to Eliminate Tipping; Combine Waiter and Cook Roles [EPDX]

Le Pigeon to Eliminate Tipping in June [EPDX]