How Florida’s minimum wage increase affects businesses with tipped workers
Labor costs will increase for local businesses in September 2021 when the state’s minimum wage increases to $10 an hour.
It is the first step toward reaching a statewide $15 an hour minimum wage by 2026.
Employers with tipped workers, however, won’t be forced to cover the full cost of the raise.
Under Florida’s Amendment 2, passed in early November, tipped workers will gradually see their wages rise to $11.98 an hour by 2026 from the current $5.54 an hour.
Employers in Florida are legally able to pay tipped workers, such as waiters and bartenders, $3.02 below the state’s minimum wage per hour. That does not change under Amendment 2 said Omar Ali-Shamaa, an attorney with Miami law firm Wolfe Pincavage.
“As long as the workers earn the difference from tips – and I’ve never seen a tipped employee not earn at least minimum wage with tips – the employer can get [a tip credit],” he said. “That’s not changing.”
The state’s minimum wage, currently $8.56 an hour, will jump to $10 an hour in September 2021. At that point, the wage for tipped workers will increase to $6.98 an hour.
But some small business owners, especially in the hospitality sector, argue the wage increase will place even more pressure on ventures still struggling to rebound from losses tied to the Covid-19 pandemic.
Ali-Shamaa said it’s safe to assume many restaurants will either raise consumer prices, cut positions or reduce employee hours to offset the increase in labor costs.
“To the extent that they can automate, they will,” he said. “The industry was already gearing up for fast-casual to eliminate the need for positions like servers and busboys for a while, and the minimum wage increase will expedite that.”
A minimum wage hike could come with job cuts, according to a 2019 report from the Congressional Budget Office, which looked at the effects of a federal minimum wage increase.
Although the report said boosting the federal minimum wage to $15 an hour would raise wages for more than 17 million workers, it concluded an estimated 1.3 million people could lose their jobs as a result.
Attorney Andrew B. Zelman, a partner at Berger Singerman, said the successful passage of Amendment 2 could build momentum for a federal minimum wage hike.
The movement is already gaining support.
In addition to supporting a gradual federal minimum wage increase to $15 an hour, President-elect Joe Biden’s economic platform calls for an elimination of the federal tip credit.
Opponents argue the move would be a body blow to the hospitality industry.
The tip credit allows employers to pay tipped workers a federal minimum wage of $2.13 an hour.
Zelman said it’s unclear whether a federal minimum wage law that eradicates the tip credit would affect Florida’s law, which allows for the credit.
“Any proposal to eliminate the federal tip credit … would potentially affect the states,” he said.