Prop 138 Explained: Why a Maricopa Restaurateur Fights to Keep Servers’ Wages Fair

Arizona voters will soon face a significant decision regarding the wages of tipped restaurant staff. Proposition 138 seeks to allow establishments to pay tipped employees up to 25% less than the minimum wage, provided they can demonstrate that these workers earn at least $2 more than the minimum wage when tips are included.

Logan Shaughnessy, the general manager at Nando’s Mexican Cafe in Maricopa, expresses mixed feelings about the proposition. Once a server himself, he recognizes potential benefits for workers, yet he cautions against changing a system he believes is functioning adequately. “It’s an ‘If it ain’t broke, don’t fix it,’ type of scenario,” Shaughnessy commented.

If passed, the proposition would amend the Arizona Constitution, adjusting the current law that allows employers to pay tipped workers up to $3 less than the state’s minimum wage, which is set to rise to $14.70 next year. Currently, tipped employees make around $11.35 per hour. Under Prop 138, their hourly rate could fall to $11.03, as opposed to $11.70 under the existing law.

Supporters, including the Arizona Restaurant Association, argue that the change could alleviate payroll burdens for businesses. However, Shaughnessy warns that analysis and record-keeping requirements may complicate operations for many restaurant owners, especially those running small businesses. “Accounting is a nightmare,” he explained, suggesting that compliance might necessitate hiring additional staff or investing in new software.

He also observed a general downward trend in tips, raising concerns about whether servers at smaller establishments could consistently meet the earnings threshold required under the proposed laws. Shaughnessy’s own chain has seen alterations in tipping patterns, impacting overall compensation for staff.

One aspect Shaughnessy is unequivocal about is his opposition to the elimination of the tip credit altogether. He believes that enforcing a minimum wage for servers, as advocated by One Fair Wage, could disrupt the current ecosystem in the service industry. “People’s pockets are going to get tighter knowing that a server is making minimum wage,” he cautioned.

According to Shaughnessy, such drastic changes could lead to increased labor costs, which could threaten the viability of many restaurants. He warned that this could incentivize a shift toward drive-thru models over traditional dining experiences, fundamentally altering the hospitality landscape. “The service industry as we know it… those businesses will be obsolete,” he predicted.

Shaughnessy firmly advocates for maintaining the tip credit, emphasizing its importance for server morale and operational feasibility. “There should be absolutely no tax on tips,” he asserted. “The way everything’s going right now, you want to keep servers happy.”

In contrast, Catherine Sigmon, co-founder of Civic Engagement Beyond Voting in Tempe, criticized the motivations behind Proposition 138, attributing it to what she perceives as the greed of the Arizona Restaurant Association. She regards the measure as a threat to the Fair Wages and Healthy Families Initiative, a law approved by nearly 60% of voters in 2016.