Fibs and Falsehoods: Darden Corporation Claims 'No One Makes $2.13 An Hour'
September 26, 2013 · By Scott Klinger
A recent IPS op-ed on tipped wages has provoked an unfounded attack by the world's largest full service restaurant chain.
An op-ed I published on September 12 has provoked an unfounded attack by the world’s largest full service restaurant chain.
The op-ed calls attention to the struggles of restaurant workers who are paid a subminimum “tipped worker wage” by their employers. Starting in 1966, when the tipped minimum wage was first established, it was pegged to 50 percent of the prevailing minimum wage. In 1996 the linkage was undone, and the tipped minimum wage has remained $2.13 an hour in, except in the 32 states that have adopted higher wage standards.
Darden Corporation, which owns Olive Garden, Red Lobster, and several other chains, has been a leader in the National Restaurant Association’s efforts to defeat national legislation that would raise the minimum wage to $10.10 an hour and require that tipped workers be paid at least 70 percent of this amount.
The op-ed, which was distributed through the McClatchy-Tribune syndicated service and appeared in a dozen major newspapers, has drawn considerable attention from those who are tirelessly working to see that the amount they pay their tipped workers does not rise.
Samir Gupte, the Senior Vice President for Culture at Darden, responded with an open letter that was published in the San Francisco Chronicle and elsewhere, saying the op-ed was full of errors and denying that any workers at Darden make $2.13 an hour.
This letter was pure obfuscation. Gupte focused on restaurant servers’ total earnings, including tips. The op-ed focused on what Darden actually pays these servers directly. In a September 25 article in Nation’s Restaurant News, Darden spokesman Rich Jeffers contradicts Gupte’s claim that “No one makes $2.13 an hour,” when he admits that 20 percent of Darden’s hourly workers receive $2.13 an hour from Darden, before tips, affirming the claim which we made in our op-ed.
More than 40 percent of Darden’s restaurants are located in states where the tipped minimum wage is $2.13 an hour.
In another rebuttal, Melissa Autilio Fleischut, CEO and President of the New York State Restaurant Association, called our op-ed a “disservice” to hard-working restaurant workers, noting that New York recently adopted an increase to the state’s minimum wage. Ms. Fleischut failed to point out that her organization led the fight to oppose New York’s minimum wage increase.
In a recent editorial “Tips and Poverty” The New York Times concluded: “In effect, a tip for a waitress is a wage subsidy for her employer.” Most restaurant patrons assume their tip augments the wages paid by the restaurant owners, not that they replace the basic wages that restaurant owners can legally avoid paying in many states.
Having a tipped minimum wage is not only unfair to workers, it creates an unlevel playing field within the restaurant industry. The law requires McDonald’s and other fast food chains to pay all their workers at least $7.25 an hour, while allowing full service restaurants to pay large segments of their staff two-thirds less, just $2.13 an hour.
Controversies concerning Darden’s policies toward tipped workers are not new. In 2011, the company announced that it would force servers to share their tips more broadly with other restaurant employees. Now considered tipped employees, Darden cut hourly pay for bartenders and busboys by several dollars an hour in some cases. Some employees have complained that tips have not made up for their cut in basic wages provided by Darden.
Darden’s disinformation campaign will likely backfire, leading more consumers to seek the facts about the tipped minimum wage. Once more people know more about how our nation’s most profitable restaurants are working to keep workers living near the poverty line, it will leave a very bad taste in their mouths.
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