Restaurant labor group targets tips in next phase of minimum wage fight

June 12, 2013: A server clears dishes from a table inside a New York restaurant. (Reuters)

WASHINGTON – Labor groups are setting their sights next on how tipped workers in the food industry are paid, as more and more states approve hikes in the basic minimum wage.

The push, though, has raised questions -- and some confusion -- over how far the labor groups want to go to change a system that's been around for decades.

One advocate, Saru Jayaraman, co-director of the Restaurant Opportunities Center United, has been quoted in multiple media outlets as supporting a push to get rid of tips altogether.

She was quoted in the Seattle Times describing tips as “institutionalized sexism,” and told the University of California, Berkeley’s alumni magazine that “Ultimately, this system of tipping needs to go.”

When contacted by FoxNews.com, Jayaraman claimed her comments were taken out of context. She said that in a “utopian world,” the idea of tips would be eliminated. But Jayaraman said her group mostly is advocating for revamping the existing restaurant industry pay system -- swapping the tipped minimum wage in favor of a so-called living wage for all restaurant workers.

Simply put, she wants tipped and non-tipped workers to get paid on the same scale.

Presently, the federal minimum wage is at $7.25. By law, the minimum wage for tipped employees technically is the same. It is up to the employer to make sure their tipped workers earn at least $7.25 an hour – or higher depending on the state/city wage. The problem Jayaraman cites is that 80 percent of workers her organization polled say their employers skirt around the issue.

But others question that math and say it’s more likely a case of a few bad apples than a system-wide problem.

According to the National Restaurant Association, the vast majority of restaurant operators follow the rules, designed as safeguards for tipped employees. Employees must earn tips at least equal to the amount of the tip credit claimed, and the employer must have records to prove it. In cases where an employee’s earnings fall below the maximum permissible tip credit, the employer is responsible for the cash wage necessary to meet the minimum wage.

Congressional action to raise the minimum wage stalled earlier this year, but grassroots campaigns like ROC United are targeting state and local governments.

Seattle and San Diego, for example, are letting voters decide. Like other cities nationwide, they are considering passing ordinances or ballot measures that would bump the minimum wage in their area.

In March, Connecticut voted to approve a $10.10 minimum wage. There were small increases in other states, like Minnesota which in June approved a 50-cent increase to $7.75.

There are documented cases of tipped workers being wronged. On Monday, Big Texas Steak Ranch agreed to pay $650,000 in minimum back wages and $150,000 in other damages to 279 current and former tipped employees following an investigation by the U.S. Department of Labor’s Wage and Hour Division. The government says the violations stemmed from an illegal tip pooling policy the restaurant forced on its workers. It also says Big Texas Steak Ranch also made “illegal deductions from workers’ paychecks for uniforms and withheld additional percentages of tips as a disciplinary tactic.”