HOUSE COMMITTEE ON

BUSINESS, LABOR, AND CONSUMER AFFAIRS

 

 

March 28, 2005   Hearing Room B

8:30 A.M. Tapes  70 - 72

 

MEMBERS PRESENT:            Rep. Alan Brown, Chair

Rep. Sal Esquivel, Vice-Chair

Rep. Mike Schaufler, Vice-Chair

Rep. Paul Holvey

Rep. George Gilman

Rep. Derrick Kitts

Rep. Chip Shields

 

STAFF PRESENT:                  Janet Adkins, Committee Administrator

Katie Howard, Committee Assistant

 

MEASURES/ISSUES HEARD:        

HB 2098 – Work Session

HB 2409 – Public Hearing

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 70, A

003

Chair Brown

Calls the meeting to order at 8:37 a.m.  Opens the work session on HB 2098.

HB 2098 – WORK SESSION

006

Janet Adkins

Committee Administrator.  Explains HB 2098.  Refers to the -1 amendments (EXHIBIT A).

034

Rep. Schaufler

Asks why all the costs are not reimbursed to someone who is found not guilty.

036

Carol Halford

Board of Architect Examiners.  States that she did not have the amendments drafted.

044

Rep. Esquivel

Explains the -1 amendment and states that if you have been exonerated then the Board of Architect Examiners has to pay the plaintiff.

051

Rep. Schaufler

Asks clarifying question.

053

Rep. Kitts

Asks why the amendment says may reimburse.

057

Rep. Esquivel

Responds that it may be possible for the language to be made more definitive. 

059

Rep. Kitts

Asks if the committee can do a conceptual amendment.

066

Adkins

States that the amendment can be taken back to Legislative Counsel.  Explains why the -1 amendments are not more definitive.

076

Rep. Esquivel

Talks about how the committee is struggling with the concept of innocence.  Explains that the amendment may be a good middle ground. 

085

Rep. Kitts

Responds that, if the Board of Architect Examiners is going after architects, the board should be sure that the defendant is guilty.

092

Chair Brown

Closes the work session on HB 2098 and opens the public hearing on 2409.

HB 2409 – PUBLIC HEARING

098

Janet Adkins

Committee Administrator.  Explains HB 2409.  Submits written testimony on the behalf of Phillip Kennedy-Wong in opposition to HB 2409 (EXHIBIT G)

132

Rep. Gilman

House District 55.  Speaks in support of HB 2409.  Discusses his experience training young people and believes that he should not have paid them the full minimum wage.

150

Bill Perry

Oregon Restaurant Association.  Speaks in support of HB 2409.  Refers to attachment A and discusses tip reporting (EXHIBIT B, Pages 3 - 5).  Notes that tip reporting is the only way that the employer can count their tip as part of the wage.  States that HB 2409 falls in line with two provisions of the Fair Labor Standards Act.  Notes that other states have tip wages and how people hired on commission do not have to pay minimum wage if the employee makes more than minimum wage through commissions (EXHIBIT B, Pages 6 – 13).       

200

Perry

Says that HB 2409 will allow servers to make the same amount of money and talks about how menu prices going up allow tips to go up.  Mentions studies done on how much a server actually makes (EXHIBIT B, Pages 13 – 29).  Talks about how cooks’ wages and benefits have not increased. 

260

Perry

Talks about federal law and tip rules (EXHIBIT B, Page 4).  Notes that cooks get hurt by current state law, because servers do not have to share tips with the cooks and others in the kitchen.  Says that he has had to decrease healthcare benefits and increase premium payments that employees have to pay due to the rising cost of labor. 

314

Debra Caldwell

Restaurant Owner, Klamath Falls. Speaks in support of HB 2409.  Talks about her experience as a business owner in California and how she paid all of her employees more than minimum wage when she first started.  Notes that the only minimum wage employees were the waitresses.  States that the Internal Revenue Service (IRS) penalizes her when her waitresses do not report their tips as income. 

354

Caldwell

Talks about how she cannot enforce giving tips to employees in the kitchen.  States that she has never had a waitress leave with less than 15 dollars an hour.  Mentions the difficulty of having to increase the prices of the menu when increasing her waitresses’ wages every year.  Adds that this menu price increase makes the waitresses’ tips higher.

406

Caldwell

States that no major food chains have started on the west coast, because the startup price is so high. 

TAPE 71, A

001

Caldwell

Talks about how she trains her employees and states that she does not have a problem freezing the minimum wage for waiters and waitresses.  Says that she is a hard worker and that the minimum wage negates employees’ merit raises.

024

Chair Brown

Asks if the Oregon Department of Revenue requires that tips are counted as income.

026

Caldwell

Notes that the state of Oregon does not require tips to be reported as income.  Talks about the IRS’s requirement that tips be reported as income and that the IRS holds the employer accountable.

046

Chair Brown

Asks if the tips are counted as wages in the calculations for worker’s compensation and unemployment insurance payroll charges.

047

Caldwell

Says that it is based on the tip books that the IRS requires the waitresses to keep. 

052

Bill Perry

Says that the employer is liable under audits to pay the taxes on the unreported tip income.

056

Rep. Schaufler

Talks about his family’s experience bucking hay.  Asks why restaurants were excluded from the rule that allows employers not to have to pay minimum wage to commissioned workers, and if there are any restaurants that give commissions and are exempt from the minimum wage requirement.

072

Bill Perry

Talks about how in 1977 servers were no longer considered commissioned employees.    

080

Rep. Schaufler

Reiterates second part of question.

085

Bill Perry

Says that if the tip is required by the house it belongs to the house.  Mentions situation in Ashland that paid servers $17 an hour and how they lost employees.  States that they do not want to take tips away from servers.

111

Caldwell

Talks about how having extra substitute staff at the front is not possible because they do not have enough money to hire more workers.  Talks about how her reputation is impeccable and how she needs good workers.  States that she is not underestimating her employees’ skills.

146

Rep. Holvey

States that people that work for a living should make a good living.  Asks how many restaurants have healthcare for their employees.

156

Perry

Talks about how 70 percent of the members supplied healthcare four years ago.  Refers to Labor Issues Survey (EXHIBIT B, Page 30 – 40)

185

Tim Nesbitt

President, Oregon AFL-CIO.  Submits and reads from written testimony in opposition to HB 2409 (EXHIBIT C).  Emphasizes that the increase in minimum wage was passed by Oregon voters.  Says that age should not be used to lower some people’s wages. 

241

Nesbitt

Continues to read from written testimony (EXHIBIT C).  Talks about servers who do not work 40 hours a week.  Refutes the brochure “Why a Tip Wage is Good for Oregon” (EXHIBIT B, Pages 6 – 13).  Notes that servers and kitchen staff make less money in tip penalty states.  Asserts that there are more server jobs in states that do not have a tip penalty.

285

Nesbitt

Continues to read from written testimony (EXHIBIT C).  States that tip penalty wages will not bring more jobs and higher paying jobs to Oregon.  Wants to protect local restaurants. 

317

Josh Gibson

Portland.  Speaks in opposition to HB 2409.  Talks about how HB 2409 will cut wages for minimum wage employees.  Elaborates on his experience as a server in New Mexico, which is a tip penalty state.  Says that it is easier for employers to hire a lot more employees if the wages are lower and how it would decrease the tips for individual servers.   

360

Gibson

Says that the Oregon restaurant industry is growing.  Shares doubts that, if HB 2409, passed more money would go to kitchen staff.  Talks about how most tipped employees do not make $17 an hour. 

TAPE 71, B

018

De Ette Peck

Gresham.  Speaks in opposition to HB 2409.  States that she barely makes enough money to live on and support her daughters.  Says that she is not offered health benefits, because she does not work enough hours.  Urges the committee not to freeze minimum wage.

050

Rep. Shields

Asks what the Department of Labor’s average is for servers’ pay rate. 

053

Nesbitt

References the second packet and explains how they calculated the average amount wait staff makes (EXHIBIT C, Page .  States that the average is $9.98 per hour.

059

Rep. Shields

Asks where the $17 per hour comes from.

061

Nesbitt

States that it comes from the ORA’s brochure (EXHIBIT B).

064

Rep. Holvey

Asks if they have any data about how many employers offer healthcare.

066

Nesbitt

Says that they do not know and states that many employees may not even be eligible.

070

Gibson

States that he has never received healthcare and that it is not common for employers to offer benefits.

080

Peck

Mentions that her husband works at a “prestigious” restaurant and has to pay $300 or more a month for medical benefits.

087

Rep. Kitts

Asks what a reasonable level is for wait staff. 

093

Nesbitt

Says that the calculation is done by the Northwest Federation of Community Organizations (EXHIBIT C, Page 10)

095

Rep. Kitts

Asks why minimum wage is not $10.85 an hour if that is defined as a living wage.

098

Nesbitt

States that the minimum wage is just enough to keep one adult with a dependant above the poverty line.

107

Peck

States that if she was being paid minimum wage it would not be a livable wage.

113

Rep. Schaufler

Notes that $10.85 an hour is barely a livable wage.  Asks if it is legal for a restaurant to pay commission and exempt its wait staff from receiving minimum wage.

123

Nesbitt

States that an employer cannot divert the tips. 

134

Peck

Says that she worked for an establishment that had a gratuity for parties of eight or more. 

140

Rep. Kitts

Asks how the gratuity is set for parties and how it is different.

145

Gibson

States that legally someone cannot be required to pay a gratuity.  Says that credit card slips should say suggested gratuity.

158

Rep. Kitts

Says that the restaurant automatically added the gratuity.

165

Gibson

States that it is not legally enforceable but that no one has ever left without paying the gratuity.

171

Rep. Esquivel

States that he resents the automatic gratuity and believes that waiters and waitresses should earn it.

183

Gibson

Says that waiters are taxed based on an estimate of what they earn.

189

Peck

Agrees with Rep. Esquivel.

191

Rep. Holvey

Asks how Ms. Peck provides healthcare for her family.

195

Peck

Says that one daughter is on the Oregon Health Plan and the other is covered by her father’s insurance.  States that she does not have health insurance. 

206

Chair Brown

Submits written testimony on the behalf of Dan Gardner (EXHIBIT D).

210

Rep. Diane Rosenbaum

House District 42.  House Democratic Whip.  Submits written testimony in opposition to HB 2409 (EXHIBIT E).  Says that she collected signatures for Ballot Measure 25 (2002) and speaks in support of the current law enacted by this measure. Talks about how women would be disproportionately affected by HB 2409.  Notes that HB 2409 would reduce workers’ real wages. 

272

Jeff Richardson

Hotel Employees Restaurant Employees Local 9.  Speaks in opposition to HB 2409.  Says that Portland has more restaurants per capita than any other city.  Wants employers to pay a fair wage.  Asserts that the vast majority of people who are servers do not have healthcare. 

331

Rep. Kitts

Asks Mr. Richardson to submit his survey for the committee.

335

Richardson

Says that his survey was done just by talking to many employees in the industry.

339

Rep. Schaufler

Asks what the vote was for Measure 25 (2002).

341

Rep. Rosenbaum

Offers to get them for the committee.

349

Richardson

Adds that the wage for training employees under the age of 18 does not increase every year under HB 2409.

365

Adkins

States that the results for Measure 25 (2002) were 645,016 in favor and 611,658 in opposition. 

381

Matt Harner

Speaks in favor of HB 2409.  Talks about his work experience in the restaurant business.  States that he knows personally several waitresses that make $60,000 a year on the Oregon Coast. 

TAPE 71, B

001

Harner

Talks about he makes enough money to support his family working as a waiter.  Says that you cannot expect to live on minimum wage and that it is not the majority of his paycheck. 

050

Harner

States that $10 an hour is a low average based on his personal experience in the restaurant business. 

066

Mike Downing

Restaurant Owner, Oregon Coast.  Speaks in favor of HB 2409.  States that he pays $12,000 to $15,000 a month in wages to employees and that he does not make any money in the winter, because tourism drops off.  Indicates that he cannot afford to provide healthcare to his employees.  States that his waiters make good money.    

103

Downing

Says that costs keep going up and that there is a limit on how much can be charged for food. Talks about how he is trying to make ends meet.

122

Gracie Strom

Restaurant Owner, Lincoln County.  Speaks in support of HB 2409.  Says that she has enjoyed the restaurant business.  Believes that the automatic increase in minimum wage is hard on businesses.  Gives example of her cook who has been with her for forty years.  States that they never have to advertise for wait staff. 

163

Strom

States that no one wants to be cook anymore and mentions that three people applied for the cook position when she advertised for it. 

190

Rep. Shields

Asks if the Olive Garden would hold onto the money and not increase the pay for kitchen staff.

199

Harner

Believes that it would affect small businesses positively.  States that corporate restaurants can absorb the cost of high turnover more easily and therefore do not have to pay their employees more. 

239

David Brown

Bellman, Portland.  Speaks in opposition to HB 2409.  Talks about his wife and her work as a waitress.   Believes that many waiters and waitresses are professionals.

286

Adam Petkun

Chair, Oregon Student Association Board.  President, Associated Students of the University of Oregon.  Submits and reads from written testimony in opposition to HB 2409 (EXHIBIT F).  Talks about how HB 2409 would negatively affect students who support themselves as waiters and waitresses.  Notes the high cost of attending college in Oregon. 

334

Sarah Ramus

Restaurant worker, Salem.  Speaks in opposition to HB 2409.  Talks about her struggle to pay for her expenses during high school.  Believes that it would not be fair to lower the minimum wage.  Notes that most of the people that she meets do not make very much money being a waiter or waitress.  Talks about her sister’s struggle to support herself and her daughter when she was a minor.  Asserts that her sister did not deserve to make less than minimum wage. 

398

Steve Kline

Member, Board of Directors, ORA.  Speaks in support of HB 2409.  Believes that this is not an issue of management versus labor.

TAPE 72, A

001

Kline

Says that he is one of the smallest companies that provide good benefits to their employees.  States that, since he did not cancel benefits for his employees, one of his employees was able to receive a kidney transplant.  Emphasizes that restaurant owners try to make their employees happy and take that into account when hiring more employees.  Indicates that this consideration by restaurant owners ensures that employees' tips are not cut. 

054

Kline

Says that, if every restaurant can add an employee, it will help the state of Oregon. 

064

Loren Stogland

Restaurant owner, Portland.  Speaks in support of HB 2409.  Says that minimum wage was designed for the lowest paid employees and that waiters and waitresses are not making the least amount of money so they are not entitled to the benefits of the yearly increase in minimum wage.  Talks about the benefits that are offered to his employees.  States that there is a finite amount of money that can be given to laborers. 

109

Stogland

Says that in many situations, such as when an individual applies for a loan, tips are considered income. 

118

Jessica Watson

General Manager, Wooden Nickel Pub and Eateries and Max Place.  Speaks in support of HB 2409.  Says that HB 2409 would help the relationship between “the back of the house and the front”.

144

Chair Brown

Adjourns the meeting at 10:41 a.m.

 

 

EXHIBIT SUMMARY

 

  1. HB 2098, -1 amendments, staff, 2 pp
  2. HB 2409, informational packet, Bill Perry, 39 pp
  3. HB 2409, written testimony, Tim Nesbitt, 29 pp
  4. HB 2409, written testimony of Dan Gardner, Rep. Alan Brown, 3 pp
  5. HB 2409, written testimony, Rep. Diane Rosenbaum, 1 p
  6. HB 2409, written testimony, Adam Petkun, 2 pp
  7. HB 2409, written testimony of Phillip Kennedy-Wong, staff, 1 p