This November, voting will become a battleground for full-service restaurants. | Photo: Shutterstock

Welcome to Government Watch, Restaurant Business’ weekly column focusing on regulations, legislation, employee mandates, and other government issues relevant to the restaurant industry. In this edition, we’ll look at new developments in the effort to get pro-worker initiatives on the November ballot.

For restaurateurs, and full-service chains in particular, not all of the election drama is about whether President Biden will stay in the race. Groups that want to eliminate the tip credit through state initiatives are making the issue a key business issue this cycle, even as they find that these final attempts could be as difficult as trying to end the break for restaurant employers through legislation.

The local chapter of One Fair Wage, a union-backed crusade leader, has been tarred and feathered in Ohio after it failed to get a referendum on the tip credit on the state’s November ballot. The rules governing referendum initiatives require residents of at least 44 counties to sign a petition to put the issue before voters. Raise the Wage Ohio has failed to meet that requirement.

But instead of graciously admitting guilt, the labor advocate turned on the Ohioans. He blamed the failure to meet the county quota on the yahoo behavior of Ohioans living in the most rural of those jurisdictions. In a message sent to local media, he claimed that the signature gatherers in the backcountry were “bullying and verbal harassment”because they were often low-income workers of color. In other words, people who lived outside the big cities of Cleveland, Columbus, Akron, or Dayton were racist elites.

Raise the Wage also claimed it was unable to submit “hundreds of thousands of signatures” calling for a referendum because the office where the petition was to be dropped off had closed early to allow for fireworks displays to go ahead of July 4.

Government officials refused to let the accusations go unanswered.This is a two-faced, disorganized rodeo by a goat campaign that has come up with every excuse imaginable for its failure to follow the law,” Ohio Secretary of State Frank LaRose said in a statement, referring to Raise the Wage’s efforts. “Access issues have never been the problem. Rural Ohioans are not to blame. I will not sit quietly while a group distorts the truth to cover up its own negligence.”

Raise the Wage has promised to focus its campaign on putting an anti-tip credit initiative on the 2025 ballot. Off-year elections tend to have lower turnout than presidential elections, theoretically making it easier for the industry to get enough “no” votes.

The referendum’s omission from the 2024 ballot is a huge setback for the local restaurant industry. The initiative called for raising the state’s minimum wage to $15 an hour, with a phase-out of the tip credit added in. It’s hard to oppose ballot proposals to raise the minimum wage because voters see the question as, “Do you want your neighbors to get a raise?” The tip credit is a secondary issue, in part because it’s hard for those outside the industry to understand.

But the turn of events has left the local restaurant industry with its own complication. To eliminate the need for a referendum initiative, the Ohio Restaurant Association called in May to raise the state’s minimum wage to $15 an hour through legislation but keep the tip credit, albeit at a more costly level. Now it’s on the books, calling for a nearly 50 percent increase in the legal minimum wage, from the current $10.45 to $15 by 2028. The bill it supports would raise the minimum wage that employers pay servers and bartenders directly to $7.50 an hour, up from $5.25.

$18 minimum wage and no tips in Arizona?

One Fair Wage has had fewer problems with its Arizona initiative, collecting and submitting enough signatures before the state deadline. Now it’s a matter of whether the petition will be certified, giving the green light to put the referendum on the November ballot.

The measure would raise Arizona’s minimum wage to $18 an hour, up from $14.35 now, and phase out the tip credit. If successful, it would give the state one of the highest minimum wages in the country.

The local restaurant industry has taken an unconventional route to defeat One Fair Wage: It is supporting a competitive referendum that would allow employers to pay tipped workers 25% less than the state minimum wage, as long as tips raise workers’ incomes to a minimum threshold.

Referendums in Massachusetts and Missouri set to move forward

One Fair Wage also met petition demands to place a referendum on the November ballot in Massachusetts. The measure would phase out the tip deduction by 2029.

The petition has not yet been recognized as valid and approved by the state.

In Missouri, union advocates have collected enough signatures to meet the requirement to put a wage initiative before voters in November. The proposal would raise the minimum wage to $13.75 an hour in 2025, with the threshold increasing by $1.25 per year until it reaches $15 in 2026.

The regulations also require employers to provide employees with one hour of paid leave for every 30 hours of work.

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