When Palo Alto officials voted last September to gradually raise the minimum wage to $15 by 2019, they found plenty of allies across the Peninsula, where numerous other cities are pursuing similar efforts.

But on Monday night, the City Council agreed to advocate for a policy that could pit them against the very labor groups who cheered the wage increases: a state law that would allow cities to exempt tipped workers from the wage requirement.

The council's decision to support such a law was driven by concerns from the local restaurateurs, who had argued over a series of meetings last year that raising the minimum wage uniformly would force them to pay the higher wage to waiters and other tipped workers, most of whom already make more than $20 per hour if their tips are taken into consideration. More importantly, it would make it harder for restaurants to give raises to the back-of-the-house workers such as cooks and dishwashers.

California law, however, prohibits cities from distinguishing between tipped and untipped employees. For owners of several local establishments -- including Fleming's, the Counter and Dan Gordon's -- this creates a major problem. They and others argued at recent meetings that raising the wage without exempting tipped employees would hurt the restaurant business and force many establishments to shutter. Peter Katz, owner of The Counter, told the council at a hearing last September that most of the servers are "unconcerned with daily paychecks" because they're getting $30 to $40 in tips.

"The losers in all of this will probably be the folks who most need it and, frankly, the restaurant owners," Katz said.

Three other restaurateurs -- Michael Ekwall of La Bodeguita del Medio, Jesse Ziff Cool of the Flea St. Cafe in Menlo Park, and Galen Fletcher of Sundance The Steakhouse -- made a similar argument in a Weekly opinion piece last October.

"In restaurants, cafes and other businesses where employees earn tips, the increased minimum wage will go directly to the highest earners in those businesses," the three wrote. "In most restaurants, the staff who receive the raise already earn, on average, at least $30 per hour and often much more. At the same time, the restaurant employees who would benefit most from an increase won't see their pay go up much, if at all."

On Monday, the council signaled that it has taken the industry's concerns to heart when it agreed to advocate for a state law that would allow cities to differentiate between tipped and non-tipped workers when it comes to wage. By a 5-4 vote, with Mayor Gregory Scharff and Councilmen Cory Wolbach, Eric Filseth and Adrian Fine dissenting, the council voted to lobby for the state to "allow cities to deviate from the minimum wage requirement when income including tips exceeds minimum wage."

Even those who voted against the proposal were somewhat sympathetic, though they had some quibbles with the exact wording. Wolbach, the most fervent dissident, proposed that the Policy and Services Committee hold a broader discussion about the best way to ensure fair pay, whether it means opposing exempting California's existing prohibition on tip sharing or supporting the inclusion of tips in calculating "total compensation."

"Moving forward now is premature," he said.

Fine also argued that the topic is complex and requires more discussion.

"This seems like we're trying to influence state policy for a single local decision," Fine said. "I think it needs to be rethought on a Policy and Services level."

But supporters of the policy change cited the hearings that the council already had on this topic last year and pointed to the fact that its Policy and Services Committee had already voted unanimously in November to include the minimum-wage exemption for tipped workers on the city's list of lobbying priorities. Councilwoman Liz Kniss, who sits on the committee, was the most vocal champion of pursuing the topic. She said at the Nov. 29 meeting that she was influenced by her conversations with Cool and by the comments from the other restaurateurs.

"To be paying that wage for those who make tips, according to every restaurateur I spoke to is very difficult," Kniss said. "Someone will have to take up that cause."

At the same time, no one expects the change to come quickly, if at all. Several cities, including Sacramento and Los Angeles, had flirted with exemptions for tipped employees but ultimately saw their plans dissolve because of existing laws and pressure from labor groups.

The Palo Alto council similarly balked in September at exempting tipped workers, citing state law. While the restaurant owners advocated for the exemption, not everyone shared their point of view. Local resident VJ Mohan noted at the September meeting that tips and wages should not be conflated.

"A wage is between an employer and an employee. A tip is between a customer and somebody who served them," Mohan said. "What I give to the employee has nothing to do with you, nothing to do with the owner. You pay for their work, and I pay for their service."

Among council members, Wolbach also spoke out in September against taking on the state law. He suggested at that time that exempting tipped workers would amount to "opening a loophole you can fly a jumbo jet through."

"Any business can then put out tip jar and that say people who are interacting with customers are tipped employees and exempt from minimum wage, no matter whether people are putting anything in that jar or not," Wolbach said.

The council's decision to include the item on its list empowers the city's lobbyist in Sacramento to hold discussions with legislators and restaurant associations about potential bills. Yet even Kniss acknowledged at the Nov. 29 meeting of the Policy and Services Committee that changing the law would likely be an uphill battle.

"I know there will be a big pushback from unions," Kniss said. "That's really tough."