Olive Garden is increasing their salaries. That’s not the whole story

Actually in Darden Restaurants (DRI), which owns Longhorn Steakhouse, Cheddar’s Scratch Kitchen, and other chains in addition to Olive Garden, all employees are entitled to at least the federal minimum wage of $ 7.25 or the state minimum wage.

But not all of your wages have to come from the company. In many states, employers pay tipped workers a lower minimum wage than the minimum wage, which is $ 2.13 at the federal level and is higher in some states. Customers pay the rest in tips. If those tips don’t get employees to meet minimum wage, companies like Darden must make up the difference.

Darden said Thursday that starting next week, hourly restaurant employees will earn at least $ 10 an hour, including tips, instead of the federal minimum wage or the state minimum wage. The company plans to increase that floor to $ 11 per hour in January 2022 and $ 12 per hour in January 2023. The change will affect approximately 20% of hourly workers, according to the company.

The move comes at a time when Darden is trying to attract workers.

“Our biggest challenge right now is staffing,” Darden CEO Eugene Lee said in a call with analysts. Before the pandemic, Darden had about 165,000 active hourly employees, he said, but a few weeks ago that number dropped to about 115,000. As pandemic restrictions lift and people feel comfortable dining out again, Darden hopes that customers will begin to return to his restaurants. Staffing is “our number one priority right now,” Lee said.

Workers’ wages have been a hot topic as advocates push to increase the federal minimum wage. Part of that debate revolves around the tipped minimum wage. The offer to raise the minimum wage, which ultimately fell outside the president’s $ 1.9 trillion relief bill, included the elimination of the sub-minimum wage.

Critics say the practice puts workers at risk, particularly women and people of color, because employees who depend on customers for income cannot turn away when customers harass them. Your salary could also be affected by customer biases or slow changes.

A recent report from One Fair Wage, which advocates for the elimination of the sub-minimum wage, discussed the results of a January survey of approximately 500 women age 31 and older who are current and former restaurant workers. Survey found that, compared to non-tipped female workers, a higher percentage of tipped restaurant employees reported at least one experience of sexual harassment.

“If Darden were serious about making sure their employees were paid enough money to live on, they would raise the minimum wage to $ 15 an hour and give them tips on top of that pay,” said Saru Jayaraman, President of One Fair Wage, in an emailed statement. She dismissed Darden’s move as a trick.

Darden did not comment when asked about Jayaraman’s specific criticism. Instead, a spokesperson pointed out to CNN Business Lee’s comments on the call, where the CEO told analysts that the salary increases, along with an investment of approximately $ 200 million in employee benefits during the pandemic, “further strengthen our industry leading job proposition. “

Proponents of tipped wages say that tipped workers ultimately earn more than the minimum wage. Lee said in the analyst’s call that Darden’s hourly employees earn more than $ 17 an hour on average. And when you look at hourly workers who earn tips, he added, that average jumps to more than $ 20 an hour.


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