ALTOONA, Pa. (WTAJ) — Pennsylvania’s first change in laws for tipped workers since 1977 is taking affect on Friday, August 4 but one Altoona restaurant owner says it won’t change anything at his bar.
“At our business, it doesn’t affect anything at all, and it never has,” Thad McDonough, co-owner of Al’s Tavern said.
The new rules increase the amount of tips a worker must receive monthly before the employer can reduce hourly pay from the state’s minimum wage of $7.25 to the $2.83 per-hour tip rate.
The amount increases from $30 to $135 in tips. But McDonough says his servers and bartenders make much more than $135 in tips anyway.
“We actually don’t have a high turnover rate because our staff does well here,” he said. “That’s the way it should be to begin with.”
He said his servers make, on average, $100 to $200 on tips for a typical 6-to-8-hour shift. So, his workers are making about 12 to 33 dollars in shifts per hour.
In comparison, making $135 in tips each month, with a 30-hour work week, would mean servers would be making 88 cents in tips per hour.
McDonough thinks most family-owned and small business restaurants like his are the same way. He thinks the government waited too long to make necessary changes to adjust for inflation.
“This is all going into effect right now when it should’ve been every 10 years, every 15 years, or even sooner than that,” McDonough said.
He thinks the government should instead look at lowering income taxes for servers and bartenders.
“At the end of the day, their taxable income is partially in tips,” he said. “If you don’t pay them more, they’re actually going to be cutting into their own paycheck to pay income taxes.”
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The new regulations also include these areas, according to the Wolf Administration:
- Alignment with new federal regulations codifying long-standing policies that govern employer tip credits to allow employers to take a tip credit under certain conditions, including that the employee spends at least 80 percent of their time on duties that directly generate tips, commonly known as the 80/20 rule.
- Alignment with updated federal regulations that allow for tip pooling among employees but in most cases excluding managers, supervisors, and business owners.
- A prohibition on employers deducting credit card and other non-cash payment processing transaction fees from an employee’s tip included with a credit card payment or other non-cash method of payment.
- A requirement for employers to clarify that automatic service charges are not gratuities for tipped employees.
McDonough said these additional regulations won’t make changes to his business, either.