OCEAN CITY, Md. -- Maryland lawmakers are debating legislation that could phase out tip credits. If it passes, service-industry workers would earn the state's minimum wage by 2027.
At the moment, tipped workers earn $3.63 an hour plus tips. With tip credits, if a tipped employee does not earn the state's minimum wage, the employer must make up the difference. So either way, the worker does make minimum wage.
The worry with this legislation for workers in Ocean City, is they can make up to $40.00 to $50.00 an hour when the resort town is at it's busiest. So the feel this legislation could wind up doing more harm than good.
"If it ain't broke don't fix it, and we're doing just fine," said Jeffrey Hennessey, a bartender at Fager's Island. "And please, it it's not too much trouble if the government could just focus on doing things that actually help people, please just do that."
SB160 would slowly phase out tips. By January 1st, 2025, the tip credit would jump from $3.63 to $8.50. On July 1st, 2025, it would rise to $10.50. At the start of 2026, the tip credit would sit at $12.00 and then on July 1st, 2026 it would go up to $13.50.
After a year, starting in July of 2027, employers would not be able to include tip credit as part of an employees wage.
Maryland lawmakers considered doing away with tip credits last year, but that effort failed. Now, John Fager, owner of Fager's Island, feels employees and employers have spoken.
"Why this legislation keeps coming up year after year in the Maryland legislature, I'm just not sure what's driving that or what the impotence is to make a change when we have a system that's working," said Fager.
Adele Finley, a waitress in Cambridge, believes even if everyone makes a regular $15.00 an hour wage, the quality of service could be devalued.
"There is no incentive, you're just going to have all the ones that say 'oh good I'm getting a paycheck'," said Finley. "There's nothing good about that, you're not going to put any effort into it, you're not going to treat people better."
The bill has moved on to the finance committee, who discussed it at a hearing on Thursday. If passed, it would go into effect on October 1st, 2024.
