Hot Off the Grill Edition #13

Opponents of Tip Credit Withdraw Signatures in AZ

The News: Last week, One Fair Wage (OFW) announced it would withdraw the signatures it submitted in Arizona in support of its 2024 ballot initiative to eliminate the tip credit in the state.

How We Got Here: OFW submitted 354K signatures in July, allegedly surpassing the 250K valid signature threshold to qualify for the ballot. In response, the Arizona Restaurant Association, with significant support from the National Restaurant Association, filed a lawsuit challenging the validity of OFW’s signatures. This challenge resulted in OFW withdrawing its submission.

Key Takeaway: In a huge win for the restaurant industry, the AZ 2024 ballot will not include an initiative to eliminate the tip credit.

Bigger Picture: Of the 4 states OFW targeted for 2024 ballot initiatives to eliminate the tip credit, the National Restaurant Association and its state restaurant association partners have defeated all but 1.

What’s Next: OFW says it will refocus its resources on pushing a similar measure through the AZ Legislature next year. In the short term, OFW is challenging a constitutional amendment on the 2024 ballot, passed by the AZ Legislature and backed by the Arizona Restaurant Association, to protect the tip credit in the state. A judge recently affirmed that the proposed constitutional amendment should appear on the AZ ballot; OFW says it will appeal.

Updated Information on MI Minimum Wage, Tip Credit  

The News: The Michigan Supreme Court (MSC) recently reinstated 2 2018 ballot initiatives as law, significantly changing Michigan wage and hour law. The changes are set to begin Feb. 2025. Notably, the ruling explicitly indicated that Michigan’s legislature could intervene.

Dive Deeper: The Improved Workforce Opportunity Wage Act is one of the 2 laws that were reinstated. It will raise MI’s minimum wage and tie subsequent increases to inflation. Additionally, it will shrink the tip credit over 5 years before ultimately eliminating it. The decision also reinstates the Earned Sick Time Act. Both laws go into effect Feb. 21, 2025.

Association POV :“The Michigan Supreme Court decision makes clear that the legislature can listen to tipped workers and once again take action to stop the elimination of the tip credit. The National Restaurant Association supports the efforts of the Michigan Restaurant and Lodging Association to protect the state’s tip credit and will continue to work closely with them in the weeks ahead.”– Mike Whatley, VP of State Affairs and Grassroots Advocacy

The Impact On MI: On Feb. 21, 2025,

• The min. wage will increase to approximately $12.48/hr.

• The tip credit will increase to approximately $5.99/hr.

• By 2028, the min. wage will rise to approximately $13.50/hr. and subsequent increases will be tied to the rate of inflation

• By 2029, the tip credit will be phased out completely

• Note: The above numbers are estimates as the MSC’s ruling requires further interpretation from the MI Department of Treasury and the reinstated laws are imprecise.

What’s Next: The Michigan Restaurant & Lodging Association (MRLA) is working to secure a legislative solution that will offset the ruling’s most damaging impacts to the hospitality industry and preserve the tip credit.

Learn More: Check out MRLA’s Aug. 9 FAQ here.

Take Action: Visit Save MI Restaurants. Share Save MI Tips, a server-led initiative where restaurant employees can learn more and get engaged to protect their income.

Taxation of Tips Emerges as a Real Campaign Issue

On a recent episode of the Working Lunch podcast, National Restaurant Association EVP Sean Kennedy discussed the emergence of exempting tips from federal income taxes as a key campaign issue. Kennedy acknowledged that the industry is still analyzing what a change in the way tips are taxed could mean for the restaurant business.

Harris, Trump See Votes in Not Taxing Tips

Over the weekend, VP Kamala Harris joined former President Donald Trump in advocating for eliminating taxes on tips for service workers, a proposal that has gained traction among tipped workers. “The No Tax on Tips Act is sensible legislation that could provide tax relief for them and their families, putting more money in their pockets at a time when we’re all feeling the squeeze of higher prices,” National Restaurant Association spokesperson Sean Kennedy said of the Cruz bill in a statement.

What Do Chain Restaurant Closures Say About the Economy?

Despite the closure of several well-known restaurant chains, the restaurant industry is generally growing, but specific economic challenges and competitive pressures have led to the downfall of some brands.

BOCES Culinary Arts Instructor Named Educator of the Year

Chris Cornell, a CTE Culinary Arts Instructor at St. Lawrence-Lewis BOCES, has been named the2024 ProStart Educator of the Year for her outstanding dedication to culinary education, her innovative teaching methods, and her commitment to student growth and development.

Summer Of Action: Hill Runners Engage Lawmakers at Home  

“There is no better place for operators to tell their stories to lawmakers than in their own restaurants, and August is an ideal time to do it since members of Congress are home for summer recess,” said Mike Whatley, the Association’s VP of State Affairs and Grassroots Advocacy. “The Hill Runners are working to build trust with their lawmakers and this opportunity is one more way for them to do that. In a very busy political year, the Hill Runners have a real chance to cut through some of the noise and focus lawmakers on issues where they could make a big impact.”

Restaurant Job Postings and Wage Growth remain solid despite labor market cooling

Job openings, as measured by both the Bureau of Labor Statistics’ JOLTS data and online job postings aggregated by Light cast, indicate a sustained labor market tightness. Trends show a deceleration from post-pandemic highs but continued strong demand, particularly in the restaurant and foodservice sectors, with a notable increase in average starting wages for entry-level positions.