It’s déjà vu for District restaurant owners and other employers of tipped workers as D.C. voters once again approved an initiative that will gradually increase minimum wage for tipped employees over the next five years. The Tip Credit Elimination Act of 2021, which was just passed this Election Day as Initiative 82, will eventually eliminate employers’ ability to rely upon tips in satisfying their DC minimum wage (currently $16.10) obligation to employees. In 2018, the District passed similar legislation that would have eliminated an employers’ ability to rely upon the so-called “tip credit” by 2026, but the D.C. Council struck down the law before it went into effect. This time, however, the Council does not appear to be poised to take such an action. Here are some tips for employers affected by the legislation.
D.C. Voters Overwhelmingly Approve a Wage Hike for Tipped Workers
Currently, in D.C. and many other jurisdictions around the country, employers are allowed to rely upon tips, in part, to satisfy their minimum wage obligation to employees who customarily and regularly receive tips. Most of the time, this pay structure works out to the advantage of both the employer and the employee. The employer pays a lower direct cash wage, and as the employee receives customer tips and gratuities, which often substantially surpass the state minimum wage. Nevertheless, should the tips fall short, under current law, employers must pay the difference between the earned wage with...
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