On April 14, members of ROC United, the nation’s largest restaurant workers’ organization, gathered for a late-night session at their Washington office. The group was strategizing for the next day’s counter-lobbying activities, its first head-to–head battle on the Hill against the National Restaurant Association, one of Washington’s largest yet unknown interest groups. Referring to itself infelicitously as the NRA, the association claims more than 380,000 member businesses. Although it supports Democrats on issues like job creation and immigration reform, the NRA is staunchly opposed to government regulation and recently threw its weight behind big-business fights against the Employee Free Choice Act (EFCA) and healthcare reform.
In April its members assembled in Washington for their annual conference and lobbying blitz. In the NRA’s cross hairs were two bills that would guarantee sick days for all workers and raise the minimum wage for tipped workers. ROC (Restaurant Opportunities Center) United—founded in New York in 2001 and with a national membership of more than 5,000 servers, busers and other restaurant workers—supports both measures.
As ROC’s after-hours meeting began, a woman dressed in sleek corporate attire and wearing a large red-white-and-blue NRA name tag, burst into the room and spilled a mess of documents on the conference table. She had just come from a series of NRA tactical meetings, and the documents she had acquired detailed the NRA’s lobbying strategy—both long-term and for the following day, when its immense team of at least 500 NRA members would lobby more than 250 Congressional offices. The badge bearer, Bonnie Kwon, was an employee at ROC. The NRA had been infiltrated.
Labor researchers say the restaurant business—America’s largest private employer, with some 13 million workers—has become one of the economy’s most rogue sectors of employment. With laws that are inadequate and unenforced, the industry sees widespread wage theft and overtime violations. Restaurant workers across the country report being paid less than the national minimum wage, sometimes even after working overtime. At the core of the problem is the tipping system, which gives the sector nonstandard pay arrangements, making it easier for employers to break rules. Take, for example, the hundreds of employees of the Cheesecake Factory, who have reported wage theft as well as overtime and meal-break violations to ROC and other restaurant associations, and the 100-plus workers who have suffered the same treatment in addition to frequent sexual harassment at the Florida restaurant chain Daisy Dukes.
"In other industries, violations are mainly underground and hidden, but in the restaurant industry they’ve become so prevalent that they’re now common practice," says Annette Bernhardt, policy co-director at the National Employment Law Project (NELP). "The industry has come to the stage where obeying things like overtime pay is purely voluntary."
While the national minimum wage has risen incrementally, the minimum wage of tipped restaurant workers remains at its 1991 level of $2.13 an hour. The industry ranks among the lowest in offering employees paid sick days and benefits, and the use of undocumented immigrant workers is endemic. And while SEIU and UNITE-HERE represent food service workers in large institutions with cafeterias—like airports, hotels and colleges—workers in private restaurants have virtually no union representation.
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What’s more, the great recession may be worsening the problem. "Since the recession, tips as a composition of restaurant workers’ income have fallen," says Nik Theodore, director of the Center for Urban Economic Development at the University of Illinois, Chicago. "There is evidence that restaurant workers are feeling in their own pocketbooks the financial anxiety of customers." Whereas most financially pinched businesses lay off workers rather than reduce wages, restaurants appear to do the opposite: retain workers but reduce salaries. The tipping system facilitates this by automatically cutting wages as cash-strapped customers tip less.
There have been no formal studies on tipping and the recession, but anecdotal evidence from workers shows a loss of more than $15 a day in tips since the crisis began, no small sum in an occupation with a median wage of $8.75 an hour. Although federal law requires employers to make up the difference between the national minimum wage ($7.25) and the tipped wage if tips lag, workers across the country report this law going unheeded. Such abuses are not limited to low-end establishments.
For example, Andiamo, a high-end restaurant in the Detroit area, made eight of its employees work below minimum wage for months after the 2008 crash. One of those was ROC member Mike Morganroth, who after treating his girlfriend to an anniversary dinner at Andiamo applied for and secured what he thought was a plum job there. "This was a place that everyone in the service industry in Detroit wanted to work," Morganroth says. "And when I started, it wasn’t a bad place to work, and I was earning enough to live."
But as the economy ailed, business fell off. In October 2008, Morganroth noticed his tips had diminished to the point where he was making less than the national minimum wage, an arrangement he knew was illegal. He complained to management. "They told us every day that we were lucky to have our jobs during such difficult economic times, and that everyone would have to make cutbacks to keep the place in business," Morganroth recalls. (Andiamo’s president and CEO, Joe Vaicari, denies the entirety of Morganroth’s account.)
By February 2009, Morganroth’s wages had fallen to $2.65 an hour, Michigan’s tipped minimum. He began selling his belongings to pay for food, and because he couldn’t afford gas for his car, he started walking three and a half miles to work. Morganroth’s girlfriend, incredulous that he was earning so little working at such an expensive restaurant, suspected there was a paramour in the mix and eventually left him.
To be sure, the restaurant industry provides millions of well-paying, violation-free jobs, most often held by educated, white waiters who make an average of $3 an hour more than their minority counterparts, according to a ROC national study. Yet the vast majority—about 90 percent—of the industry’s workers are denied paid sick days. Maintaining this status quo is now at the top of the NRA’s priority list.
Sponsored in the House by Democrat Rosa DeLauro of Connecticut, the Healthy Families Act (HFA) would mandate seven paid sick days a year to employees of businesses with fifteen or more workers. The act covers workers across all industries but is particularly germane to food service workers, who touch things bound directly for customers’ mouths. Supporters of the bill argue that when these workers are compelled to report to work sick, they can spread illnesses to customers, creating a public health risk. Studies have concluded that the United States ranks last of all industrialized nations in providing paid sick leave. It is one of three developed nations that do not guarantee paid sick leave to those with flu symptoms.
The NRA’s main talking point on HFA is that it would kill small businesses, which the NRA argues could not bear the cost of paying for two employees to cover one shift. The NRA also opposes any increase to the $2.13 minimum wage for tipped restaurant workers, and by extension, the Wages Act, which seeks to bring that wage to 70 percent of the national minimum, or about $5.50 an hour. The NRA argues that the restaurant industry operates on profit margins too slim to take on additional costs and that the bill would kill jobs.
But Donna Edwards of Maryland, another sponsor of the bill, points out that the freeze on tipped workers’ minimum wage has led to "current poverty rates for tipped employees being three times higher than the national average."
In challenging the Wages Act, the NRA accurately points out that no restaurant worker can legally be paid below national minimum wage, even if tips lag. But this rule is often broken. A 2009 NELP survey of workers nationwide found that 12 percent of tipped restaurant workers had their tips stolen by management and 30 percent reported not being paid the tipped minimum wage.
Enforcement of such laws is the responsibility of the Labor Department, whose ability to enforce workplace regulations markedly declined under George W. Bush’s labor secretary, Elaine Chao. The department has just 1,000 enforcement officers to cover the nation’s 120 million workers. Thus the job has been largely left to the states. This can go either way. Florida, for instance, has done away with its labor department; New York and California have relatively strong labor oversight.
The vast majority of labor disputes, including those in the restaurant industry, are not dealt with by the public sector at all; they are settled by private trial attorneys, who often take up workers’ lawsuits based on their profitability, leaving out workers with smaller claims or more difficult cases. "There needs to be a balance between what can be done by private bar and what needs to be done by public enforcement agencies," says Kim Bobo, executive director of Interfaith Worker Justice and author of Wage Theft in America. "And there simply isn’t enough being done by federal and many state agencies."
Moreover, the restaurant industry’s special treatment by labor laws may contribute to its particularly low labor standards. "The important thing is that tipped pay arrangements can disguise what the actual pay rate is for workers," says NELP’s Bernhardt. "So it’s difficult for the worker to know if he is the subject of wage theft." Managers will often pool tip money, illegally remove a portion and redistribute the leftover sum to workers. Paying staff a flat weekly rate, despite differences in hours worked and tips earned, is another common scam.
The NRA describes the restaurant industry as a highly competitive business in which owners must make hard decisions to stay afloat. "There are nearly one million restaurants in the US and consumers know they have a choice of where to dine," the NRA’s Mike Donohue wrote in an e-mail. "Restaurants earn roughly four cents in profit on every $1 in sales. These are tight margins."
This kind of competition, coupled with lax enforcement, can weigh on labor standards, according to Ken Jacobs, chair of UC Berkeley’s Center for Labor Research and Education. "If your competitor realizes he can compete better by breaking the law and paying low wages, there is economic pressure across the industry to do the same," Jacobs says. Conversely, when an industry has uniform and well-enforced labor law, small and large businesses take on the new costs of business proportionally and operate on a new basis of competition. Jacobs points to San Francisco, which, after increasing the tipped minimum wage to $8.50 an hour in 2004, continued to see broad growth in the industry as well as better standards of enforcement. The city’s minimum wage has since risen to $9.79 an hour.
According to Bernhardt, however, the industry’s culture of noncompliance rules in most areas of the country. For ROC member Derek Robinson, that includes New Orleans. Robinson, who has worked in the city’s restaurant industry for eighteen years, says wage and overtime violations pervade its service sector. Bobo estimates that 78 percent of New Orleans’s restaurant workers are subject to wage theft.
In winter 2008, Tony Moran’s, a French Quarter fine-dining restaurant, began to pay Robinson, on bad weeks, the tipped minimum of $2.13 an hour. The restaurant would also throw private parties and not pay Robinson for working them, and it would knock whole days off his payroll. Management was stealing his tips and sometimes even his meager salary. "I knew it was illegal, but I didn’t really know what to do," he says. "It’s like fighting a losing war against them down here." (Tony Moran’s did not return requests for comment.)
Unable to pay his rent, Robinson went homeless while still working full time. He slept on his friend’s couch for three months, incurring credit card debt buying groceries. Robinson, 47, eventually left Tony Moran’s and now works at two other French Quarter restaurants, one of which, he reports, is manipulating his wages.
The day after ROC’s late-night meeting, the group—made up of restaurant workers and organizers, along with some restaurant owners—hit Capitol Hill. ROC guessed that most, if not all, representatives they visited would also meet with lobbyists from the NRA’s massive lobbying contingent. ROC could not match the business group’s numbers, so it decided to focus on the Healthy Families Act. ROC’s team lobbied eleven Congressional offices, including House majority leader Steny Hoyer, Anh "Joseph" Cao, Nydia Velázquez and Chris Van Hollen.
Although the NRA’s issues are available on its website, members of ROC’s Washington operation wanted a more intimate understanding of not only the business association’s lobbying strategy but also its culture. Lobbying, according to Kwon, has as much to do with social nuance as facts and figures—a good counterlobbyist knows how his or her rival will appeal personally to lawmakers on Capitol Hill. For instance, ROC discovered at the NRA conference that the group sorely lacks racial diversity. Of nearly 500 attendees at the opening ceremony, Kwon counted only ten nonwhites, including herself. With this information, ROC knew that its own diversity could be an asset in connecting with politicians with a large share of minority constituents, who are most likely to be exploited by the restaurant industry.
ROC also discovered how the NRA would court politicians to oppose the HFA: it would invoke the dangers of interventionist policies in the European service sector; emphasize the fragility of small businesses; and invite politicians and aides out to member-owned restaurants. The NRA had also prepared a special "Local Advocacy Alert" about ROC in which ROC was accused of "increasing social justice activity against restaurants" and questioned the validity of ROC’s research.
At the NRA workshop, Kwon also discovered that the NRA’s plans include the common big-business strategy of Astroturfing—emulating grassroots organizations to create the perception of support for NRA policies among the industry’s workers. Kwon learned that the NRA is working with the Business Industry Political Action Committee (BIPAC)—whose motto until recently was "electing business to Congress"—to develop websites targeted at restaurant employees. (The director of NRA’s PAC, Caitlin Donahue, joined the group last year from her job as executive director of candidate advocacy for BIPAC.)
Available to any member restaurant, BIPAC’s websites are made to appear impartial and are not traceable to restaurants or the NRA. Of course, the information presented by BIPAC supports the NRA’s main arguments, and BIPAC will tailor the website, free of charge, to match the interface of a member restaurant’s website, as it did for the Wendy’s fast food chain. After indoctrinating employees on the issues and on the candidates to vote for, BIPAC’s websites direct users to voter registration and Congressional letter-writing pages. The vast majority of the NRA’s political donations (82 percent over the past ten years) have gone to the GOP; this year’s top recipients include Eric Cantor of Virginia and Richard Burr of North Carolina, according to the Center for Responsive Politics. NRA personnel boasted that it had, through BIPAC, recently mustered thousands of employee letters to Congress opposing healthcare reform.
"A lot of workers in America used to go to their unions for information on civic participation and political education," says Kwon. "The NRA with BIPAC want to re-create that model, except for business interests. It seems to have been very effective so far."
For ROC and its allies, the Obama presidency and the Democratic majority in Congress are sources of hope—and stress: there seems to be a real shot at getting progressive legislation passed, but it must happen in a narrow and chaotic time frame. ROC and other groups pushing the HFA think it has a chance of going to the floor this fall, before the midterms. Obama has repeatedly pledged his support for HFA, and the bill has 124 co-sponsors in the House and twenty-four in the Senate. The Wages Act will likely not move before November, but the bill’s advocates hope to get it to the floor this winter or next spring. The business lobby has presented tough opposition to it, and some moderate, often labor-friendly Democrats, like Danny Davis and Debbie Wasserman Schultz, have resisted signing on to the bill.
ROC sees its mission to mobilize America’s largest workforce as just beginning. "Despite the unbelievably large amount of money that gets poured into lobbying efforts by the NRA, we’ve made a pretty conscious decision that we’re going to take this fight the way we know how to do it—that is, in the streets, bringing people rather than money to struggle for influence," says Jose Oliva, ROC’s national policy coordinator. "We hope that by improving wages and conditions in restaurants, we can raise the bar for the entire service sector, and, with that, improve labor standards in the entire private sector to create a new middle class for the twenty-first century. It needs to start somewhere."