ncl report: wage theft in the restaurant industry

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WAGE THEFT IN THE RESTAURANT INDUSTRY SURVEY

SUMMARY OF KEY FINDINGS January 15, 2013

This report presents the results of a survey conducted by ORC International on behalf of the National Consumers League (NCL) among 1,024 American adults.1 The study was intended to examine the views of Americans regarding the fairness with which restaurant workers are treated when it comes to benefits and pay. Consumers feel strongly that restaurant employees should not work while sick and, to a lesser extent, should be provided with paid sick days by the restaurant.

• Nearly all Americans (92%) believe it is “very important” or “important” that the servers and cooks in restaurants do not cook or serve while sick.

• Over half (57%) feel it is “very important” or “important” that the restaurants

they eat in provide their workers with paid sick days. o This is particularly true of females, 66% of whom believe in the

importance of paid sick days versus 48% of males. o The belief is also more prevalent among those with a high school

education or less (62%) as opposed to college graduates (52%). When it comes to wages, Americans firmly believe in the importance of fair pay for restaurant workers.

• Eight in ten (82%) say it is “very important” or “important” that the full tip left for their server goes to the waiter or waitress who served them. o Those with household income of less than $75K are significantly more

likely to feel this way than their wealthier counterparts with income of $75K or more (85% vs. 75%, respectively).

o Differences also exist by educational level, with 84% of respondents with a high school education or less rating this statement “very important” or “important” as opposed to 77% of college graduates.

1 This study was conducted via ORC International’s Telephone CARAVAN® Survey among a national sample of 1,024 adults from December 13-16, 2012. The margin of error for the sample of 1,024 is +/- 3 percent at the 95% confidence level. Smaller sub-groups have a higher sampling error. The survey was commissioned by the National Consumers League (NCL).

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WAGE THEFT IN THE RESTAURANT INDUSTRY SURVEY ORC# 721508/74350 2 | P a g e

• Roughly this same proportion (78%) believe it is “very important” or “important” that the restaurants they eat in pay their workers fairly for the wages that are owed. o Females (82%) are significantly more inclined to feel this way than males

(73%). o Lower income households of less than $75K are also more likely to

believe in the importance of fair wages versus higher income households of $75K or more (80% vs. 71%, respectively).

A majority of Americans are not aware that leaving credit card tips might result in servers not getting the full amount. With this knowledge, consumers indicate they would be more likely to provide tips in cash.

• Two in three Americans (66%) did not realize that their server might not receive their full tip if left on a credit card. o Consumers from lower income households are more likely to lack this

knowledge (68% said they did not know vs. 59% of those with income of $75K or more).

o Lack of awareness is also more prevalent among those with a high school education or less (71%) as opposed to college graduates (59%).

• Knowing that restaurant management might take a portion of tips left on

credit cards but not a portion of tips left in cash, an overwhelmingly majority (89%) would be more likely to leave their tip in cash. o While nearly all demographic subgroups are in equally strong favor of

leaving tips in cash, females (91%) are more inclined than males (86%) to say they would do same.

Support of fair payment for restaurant workers is again evident in Americans’ approval of punishment for restaurant owners who engage in illegal wage practices, as well as their agreement of the need for an increase in the federal tipped minimum wage.

• Nearly all Americans (94%) “strongly agree” or “agree” that restaurant owners who withhold a portion of employees’ wages illegally should be fined or punished in some way. o While agreement is high across all demographic subgroups, females

(97%) are significantly more likely than males (92%) to express support of this statement.

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• Close to nine in ten consumers (87%) “strongly agree” or “agree” that the federal tipped minimum wage of $2.13 an hour should be increased. o Women (92%) are much more likely than men (82%) to support an

increase in the federal tipped minimum wage. o The same holds true for lower income groups of less than $75K; 90% of

these individuals agree an increase is needed, compared to 82% of those with household income of $75K or more.

o Support is also higher among respondents with lower education levels: 90% of non-college graduates agree the federal tipped minimum wage should be increased, as opposed to 80% of those with a college education or higher.

Awareness of “employee misclassification” is low, described to respondents as “a form of payroll fraud in which an employer intentionally classifies workers as ‘independent contractors’ instead of ‘employees’ in order to deprive workers of their workplace protections and defraud state and federal treasuries out of income taxes”.

• Two in three Americans (65%) have not heard of employee misclassification. o Awareness of this term is substantially lower among females, 71% of

whom have not heard of it versus 59% of males. o Lack of awareness decreases with education: 72% of those with a high

school education or less have never heard of the term, compared to 63% of respondents with some college education and 55% of college graduates.

Once familiarized with the concept of “employee misclassification”, Americans express strong views against it, including support for punishment of the companies that engage in this practice.

• Nine in ten consumers (90%) “strongly agree” or “agree” that it is important that companies do not misclassify workers as independent contractors in order to prevent workers from receiving minimum wage and paid overtime. o Agreement is higher among women, with 93% agreeing with the

statement versus 87% of men.

• According to 93% of Americans who express agreement, companies that intentionally misclassify workers as independent contractors in order to dodge paying minimum wage, overtime, workers compensation and taxes should be fined or punished. o Once again, females are more inclined to say they “strongly agree” or

“agree” with fines or punishment (95% vs. 90% males).

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• Nearly all consumers (96%) are in agreement that workers should be clearly

informed in writing that they have been classified as independent contractors at the beginning of employment. o Agreement is universally high among all demographic subgroups.

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TOPLINE RESULTS On another subject… N1 Please tell me how important each of the following are to you personally when you go out to

eat at a restaurant. For each statement I read, please tell me if it is very important, important, somewhat important, not important, or not a consideration. [RANDOMIZE ITEMS]

(N = 1,024)

Very important/Important

(Net) Very

important Important Somewhat important

Not important

Not a consider-

ation

DON’T KNOW (Vol)

That the restaurants you eat in pay their workers fairly for the wages that are owed

78% 49% 28% 9% 5% 7% 2%

That the servers and cooks in restaurants do not cook or serve while sick

92% 78% 14% 3% 2% 2% 1%

That the restaurants you eat in provide their workers with paid sick days

57% 32% 25% 14% 14% 13% 2%

That the full tip you leave for your server goes to the waiter or waitress who served you

82% 58% 24% 10% 4% 3% 1%

N2 Did you know that your server might not receive their full tip if you leave it on your credit

card?

(N = 1,024)

29% YES 66% NO 1% MAYBE 4% DON’T KNOW

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N3 If you knew that restaurant management might take a portion of tips left on credit cards but does not take a portion of tips left in cash, would you be more or less likely to leave your tip in cash?

(N = 1,024)

89% MORE LIKELY 6% LESS LIKELY 4% NO CHANGE 1% DON’T KNOW

N4 Please tell me how much you agree or disagree with the following statements. Do you

strongly agree, agree, disagree or strongly disagree? [RANDOMIZE ITEMS]

(N = 1,024)

Strongly Agree/ Agree (Net)

Strongly agree Agree Disagree

Strongly disagree

DON’T KNOW (Vol)

Restaurant owners who withhold a portion of employees’ wages illegally should be fined or punished in some way

94% 67% 27% 3% 2% 1%

The federal tipped minimum wage of $2.13 an hour should be increased

87% 56% 31% 7% 2% 4%

N5 Have you heard of ‘employee misclassification’—a form of payroll fraud in which an

employer intentionally classifies workers as ‘independent contractors’ instead of ‘employees’ in order to deprive workers of their workplace protections and defraud state and federal treasuries out of income taxes?

(N = 1,024)

32% YES 65% NO <1% MAYBE 2% DON’T KNOW

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N6 Please tell me how much you agree or disagree with the following statements. Do you strongly agree, agree, disagree or strongly disagree? [RANDOMIZE ITEMS]

(N = 1,024)

Strongly Agree/ Agree (Net)

Strongly agree Agree Disagree

Strongly disagree

DON’T KNOW (Vol)

It is important that companies do not misclassify workers as independent contractors in order to prevent workers from receiving minimum wage and paid overtime

90% 61% 29% 5% 3% 2%

Companies that intentionally misclassify workers as independent contractors in order to dodge paying minimum wage, overtime, workers compensation and taxes should be fined or punished

93% 63% 30% 4% 2% 2%

Workers should be clearly informed in writing that they have been classified as independent contractors at the beginning of employment

96% 70% 26% 2% 1% 1%

ncl report: wage theft in the restaurant industry

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