But not all wages need to come from the company. In many states, employers pay tipped workers a floor below the minimum wage, which is equivalent to $ 2.13 at the federal level and is higher in some states. Customers pay the rest in tips. If these tips don’t get employees up to the minimum wage, companies like Darden should make up for the difference.
Darden said on Thursday that starting next week, restaurant employees per hour will earn at least $ 10 an hour, including tips, instead of the federal or state minimum wage. The company plans to increase this floor to $ 11 an hour in January 2022 and $ 12 an hour in January 2023. The change will affect about 20% of hourly workers, according to the company.
The change comes at a time when Darden is trying to attract workers.
“Our biggest challenge right now is people,” said Darden CEO Eugene Lee, in a call with analysts. Before the pandemic, Darden had about 165,000 hourly employees, he said, but a few weeks ago that number dropped to about 115,000. As restrictions on the pandemic increase and people feel more comfortable dining out, Darden expects customers to start returning to their restaurants. Building the team is “our number one priority right now,” said Lee.
Critics say the practice puts workers, especially women and people of color, at risk because employees who depend on customers for their income cannot back down when customers harass them. Your payment can also be affected by customer bias or slow shifts.
A recent report by One Fair Wage, which advocates eliminating the sub-minimum wage, discussed the results of a January survey of about 500 women aged 31 and over who are current and former restaurant employees. The search found that, compared to workers who were not tipped, a higher percentage of restaurant employees who were tipped reported at least one experience of sexual harassment.
“If Darden really wanted to ensure that his employees received enough money to live, they would raise the minimum wage to $ 15 an hour and tip employees in addition to that payment,” said Saru Jayaraman, president of One Fair Wage, in a statement sent by email. She considered Darden’s move a feat.
Darden did not comment when asked about Jayaraman’s specific criticisms. Instead, a spokesperson told CNN Business Lee’s comments on the call, where the CEO told analysts that salary increases, along with an investment of around $ 200 million in employee benefits during the pandemic, “further strengthen our industry-leading job offer”.
Proponents of tipped wages say that tipped workers end up earning more than the minimum wage. Lee said on the analyst call that Darden’s hourly employees average more than $ 17 an hour. And when you look at hourly workers who receive tips, he added, that average rises to more than $ 20 an hour.