Should NH freeze the tipped minimum wage if Congress raises the federal minimum wage?

If the federal government raises the minimum wage, New Hampshire employers will have to match that minimum. Tipped employees, however, are treated differently under state and federal law. Now lawmakers in Concord are considering a bill to insulate the tipped wage from federal increases.

Tipped wages in NH

New Hampshire’s minimum wage is set to $7.25 per hour. More precisely, it’s set to mirror whatever the federal minimum wage is set at.

If you’ve ever worked in the restaurant industry, however, you know that tipped employees aren’t paid nearly this much by their employers. In the Granite State, there is a separate “tipped minimum wage” for those who earn more than $30 per month in tips— it is currently slated as 45% of the non-tipped minimum wage. Doing the math, that comes out to $3.27 per hour. Of course, in practice, waiters and waitresses often earn far more than the standard minimum wage when you take their tips into consideration. Tipped employees also have the right to demand their employer make up the difference if the actual money they made on the job at the end of a pay period doesn’t add up to the standard minimum wage of $7.25.

Locking tipped employees in at lower rate

A proposal making its way through the Legislature—SB 137—would freeze the current tipped minimum wage where it is now if, and only if, the federal government raises the minimum wage. Rather than remaining at 45% of the federal minimum wage (which would effectively give tipped workers an automatic raise), the tipped minimum wage in New Hampshire would be pegged at $3.27 per hour. In other words, this legislation would freeze tipped workers’ minimum wage where it’s at right now, even if the federal government raises the standard minimum wage.

Currently, the tipped minimum wage applies to employees of a restaurant, hotel, motel, inn or cabin, or ballroom. This bill adds tipped employees of cigar bars to the list. SB 137 also adds secondary game operators but sets their tipped minimum wage higher, at $7.25.

Protecting the hospitality industry

At the Senate Commerce Committee’s public hearing on this bill on March 19, speakers from different corners of the Granite State hospitality industry got up to testify in favor of this bill. Representatives of the New Hampshire Lodging and Restaurant Association, the Cigar Association of New Hampshire, and the New Hampshire Charitable Gaming Operators Association were all among those in favor, along with the bill’s sponsor, Sen. Jeb Bradley.

Proponents argued that decoupling the tipped minimum wage from the federal minimum wage ensures that the NH Legislature stays in control of this issue, not the federal government. Since New Hampshire’s economy relies heavily on the hospitality industry, it is crucial to protect business owners from what could be a devastating hit to their bottom line. As one example, if the federal government raised the minimum wage to $15 per hour, the New Hampshire tipped wage would more than double automatically.

Concern regarding the wage gap

Only one person spoke against this bill at the March 19 hearing, a representative of the Granite State Organizing Project. They argued that this bill could worsen economic inequality in New Hampshire, and would particularly impact women, who make up the majority of the tipped wage workforce in this state. Also, it stands to reason that, if tipped workers make more money, they’ll have more disposable income to reinvest in their own communities.

It was also discussed that New Hampshire’s tipped minimum wage is lower than any of its neighbors. In Massachusetts the minimum tipped wage is $5.15 per hour, in Maine it is $6.08 per hour, and in Vermont it is $5.85 (but such workers must regularly receive more than $120 in tips).

Action at the federal level

Federal law only requires a tipped minimum wage of $2.13. That rate was set in the 1990s. The most recent federal minimum wage increases – in 2007, 2008, and 2009 – did not change the tipped minimum wage.

Recent proposals to raise the federal minimum wage have included increasing this tipped minimum wage or even matching it to the regular minimum wage, but the bills have stalled in the U.S. Senate. If Congress does vote to raise the minimum wage, they may choose to leave the tipped wage untouched or make a smaller increase.

Get involved

If you want to make your voice heard on this issue, there will be another remote public hearing for SB 137 on May 5 at 1PM, this time before the House Labor, Industrial and Rehabilitative Services committee. Check out our article on how to testify via Zoom at a public hearing.

Update 8/1/21: Gov. Sununu signed SB 137 into law. Click here to explore the latest legislative proposals related to the minimum wage.