Lawmakers Act on Restaurant Wages, Hospital Tax Settlement

State lawmakers met in special session Dec. 18, passing legislation resolving disputes over restaurant workers’ wages and the controversial hospital provider tax.

The Connecticut Senate and House unanimously approved a $1.8 billion settlement between the Lamont administration and hospitals across the state.

The settlement resolves a $4 billion lawsuit hospitals filed in response to the provider tax implemented in 2011 during Gov. Dannel Malloy’s administration.

That $350 million annual tax was originally designed to increase federal reimbursements to the state, with payments going to the providers who paid the state tax.

As state budget gaps widened following implementation of the tax, provider payments decreased while taxes increased, sparking the lawsuit.

The legislation passed Dec. 18 will cost the state $121.5 million this fiscal year, growing to $185.7 million in fiscal 2026.

Tipped Wages

Lawmakers also approved compromise legislation requiring the state Department of Labor, in consultation with restaurant workers and owners, to overhaul 1950 regulations covering wages.

Connecticut restaurants have long relied on the 80-20 rule, where wait staff and bartenders are paid the $6.38 hourly tipped wage—rather than the $11 minimum wage—as long as they spend no more than 20% of their time on incidental, non-service work.

The governor vetoed legislation that passed both the state Senate and House during the regular legislative session designed to resolve different interpretations of the regulation.

This week’s bill—which passed the House 125-11 and the Senate 27-3—gives Labor Commissioner Kurt Westby authority to develop regulations.

It also limits court awards in lawsuits claiming lost wages and suspends class-action suits involving restaurant wages until next April.