In Washington, D.C., minimum wage is $16.10 per hour. According to Washington D.C.’s Wage and Hour laws, all employees, regardless of the size of their employer, must meet or exceed this amount. Until now, tips could be accounted for when analyzing an employee’s total wage. This was called the “tip credit.”
On election night, District voters passed Initiative 82 (“The District of Columbia Tip Credit Elimination Act”). How will this new law impact employers?
- Over the next five years—2023-2027— the current minimum wage of $5.35 for tipped workers (the “tipped minimum wage”) will gradually increase until it reaches $16.10.
The increases to the tipped minimum wage will start at the new year and increase through 2027:
- $6 per hour on January 1, 2023
- $8 per hour on July 1, 2023
- $10 per hour on July 1, 2024
- $12 per hour on July 1, 2025
- $14 per hour on July 1, 2026
- $16.10 per hour on July 1, 2027
Those numbers assume that the minimum remains the same but is indexed for inflation. In each case, the employer must pay the full minimum wage of $16.10 per hour, but they can count employee tips as part of that wage.
Once the tipped minimum wage is equal to the standard minimum wage, any tips would be paid to employees on top of their guaranteed wages.
An identical measure passed four years ago, but the D.C. Council and Mayor Muriel Bowser reversed it. Another reversal of the policy is considered unlikely, according to the Associated Press.
Will this end tipping in the District?
Some fear that businesses may begin raising prices or adding surcharges to cover the expense of paying tipped employees the full minimum wage. This could possibly result in a decrease in overall tipping practices among customer, but the vast majority of hospitality businesses will continue to accept tips.
If you have questions about wages for tipped workers, contact Thatcher Law Firm at 301-850-1246. www.ThatcherLaw.com. Follow us on: