Governor Ned Lamont signed a bill into law earlier this month that will enact a solution to Connecticut’s latest legal issues with tipped workers.

The bill, a complex compromise signed by the governor on Jan. 6, was brokered to balance labor forces who wanted to ensure that all workers receive fair compensation, and pro-business advocates who aimed to protect restaurant owners from lawsuits. At signing, Lamont praised the bill for its balance, and complimented his colleagues in the legislature for their work on finding a solution to the fraught issue.

“This complex area of law governing wages earned by restaurant workers stirred up passions from those on all sides of the issue,” Lamont said in a statement, “We were able to deliver a fair solution that strikes an appropriate balance that both ensures wages rightfully earned by employees are protected and provides some relief to restaurant owners who made good faith efforts to comply with the law.”

The controversy over tipped workers began after the previous legislative session, when Lamont vetoed a bill that was quickly passed at the very end of the session. The bill would have retroactively denied workers the right to sue their employers over unfair wage practices.

The minimum wage in Connecticut is $11, but only $6.38 for workers who frequently receive tips, due to the added income tips provide. Despite the intended spirit of such an exception, some work-related activities, such as washing dishes, place tipped-workers in areas where they aren’t actively receiving tips. To address this issue, the Nutmeg state has long had a “80/20” rule that requires employers to pay their workers adequate compensation for their time performing non-tipped work.

Restaurant owners and employers in similar fields must pay their employees the full Connecticut minimum wage at least 20 percent of the time they work and can use the lower $6.38 during the other 80 percent, when workers must be engaged in tip-earning activities.

But the 80/20 rule has proved difficult to track and enforce, which led to a number of lawsuits against restaurant employers who believed they were following the rule. While the newly signed legislation allows for already-filed lawsuits to continue, it also requires the Department of Labor to clarify the 80/20 rule so more restaurants are not surprised by lawsuits in the future.

Senate Minority Leader Len Fasano, R–North Haven, said in his testimony for the bill that this required clarification provision, as well as others that would protect restaurant owners, were crucial to the continued success to the restaurant industry in Connecticut.

“I believe [the legislation] lays out an important path forward. We cannot lose sight of what will happen if we do not act,” Fasano testified. “Restaurant workers will be put at risk, jobs will be lost, businesses will close, and the tip wage system that enables restaurant workers to make significantly more than the minimum wage will be put in jeopardy.”

The recently passed bill is the result of a special hearing called in October to address the issue. After Lamont’s office noticed the problematic provision in the bill — which limited workers’ ability to retroactively sue their employers and had passed nearly unanimously at the end of the session — the governor called lawmakers to the capitol to discuss the issue.

At that time, Fasano and Republicans emphasized the need for protections for businesses, whereas many Democrats aimed to ensure that workers could continue to sue their employers when they believed they were not being fairly compensated. Lamont struck a tone of compromise, aiming to appease both sides in the capitol. The new bill requires the Department of Labor to clarify its rule, protects many businesses owners and allows retroactive lawsuits to continue.

Still, the law did not pass the General Assembly unanimously. Anne Hughes, D–Easton, was one of several Democrats in the progressive caucus who voted against the bill. She told the News that she was happy with some of its aspects, but still did not think it went far enough in protecting workers. Particularly, Hughes wished to see a bill that addressed the minimum wage for tipped workers more broadly.

“We are hoping to go even further to include all workers in increasing the minimum wage. The tipped wage worker credit is frozen at $6.38,” Hughes said, comparing it to the full minimum wage, which is adjusted for inflation annually. “Customers are subsidizing wages [that] employers should be paying.”

Hughes argued that if the separate, lower minimum wage for tipped-workers was eliminated, the hassle around the 80/20 rule would no longer be necessary.

Despite this objection, Hughes was happy that class action lawsuits already in the legal pipeline would be allowed to continue, telling the News that certain provisions in the law would help protect Connecticut workers against President Trump’s labor policies.

As a result of the bill, three wage auditors will now visit a number of businesses every year in Connecticut to inspect payment practices, take note of businesses in violation of the law and report back to the legislature. Hughes told the News that this was an essential part of the bill, as it will allow for previously nonexistent enforcement of the 80/20 law.

The 2020 legislative session in Connecticut will begin on Feb. 5.

 

Emmett Shell | emmett.shell@yale.edu