As a worker, you understand that you get paid for the work you do. You also understand that no matter what, you should receive a minimum amount of compensation for your labor. But what this minimum amount adds up to can fluctuate based on any number of variables, such as the type of work you do and how you’re paid.
Initiative 77
Under current Washington, D.C. law, non-tipped workers have a minimum wage of $12.50 an hour (this will go up to $15 an hour by 2020) while the tipped minimum wage is $3.33 an hour (this will also go up by 2020, but only to $5.00 an hour).
Initiative 77 will change this, bumping up the tipped minimum wage to $15.00 by 2026, with small incremental increases of about $1.50 an hour taking place each year.
Washington, D.C. is now poised to join the handful of other states that have abolished the tipped minimum wage:
- Alaska
- California
- Hawaii
- Minnesota
- Montana
- Nevada
- Oregon
- Washington State
It’s important to note that Initiative 77 is not yet in effect. Due to the unique position of Washington, D.C. as a jurisdiction, Congress has a 30-day window in which to review and strike down or modify Initiative 77. And if Congress decides not to take action, Washington, D.C.’s City Council still has the power to reverse the voters’ decision. A number of City Council members have already expressed their disagreement with Initiative 77.
There is a lot of opposition to Initiative 77 because there are fears that it will reduce the wages of those already making above Washington, D.C.’s minimum wage and put many restaurants in a difficult position of either cutting their staff or going out of business.
Even if Initiative 77 becomes law, it only affects Washington, D.C. In neighboring states, such as Virginia and Maryland, employers will continue to have the ability to pay tipped workers the lower tipped minimum wage, as long as they comply with relevant federal wage laws.
Federal Wage Laws
Pursuant to the federal law, tipped employees (those who regularly earn more than $30 per month in tips) must receive minimum wage for their work. The current federal minimum wage is $7.25 an hour, although the required cash wage (also known as the tipped minimum wage) is only $2.13 an hour.
An employer may apply the tips the worker receives to make up this difference, with a maximum tip credit of $5.12 (this is the difference between $7.25 and $2.13). Employers must follow specific rules to be able to take advantage of this tip credit.
For example, they must allow the tips to always belong to the employee (although tip pooling can be allowed in certain situations) and the employer must inform its tipped employees of how the tip credit process works.
If these rules aren’t followed, an employer cannot take advantage of the tip credit and must instead pay their tipped workers the non-tipped minimum wage instead of the far lower tipped minimum wage.
Summing It Up
- The federal law allows employers of tipped employees to pay them a tipped minimum wage of only $2.13 an hour (in DC, the current minimum wage for tipped employees is $3.33).
- Under state and federal law, employers can only pay less than minimum wage if they allow their tipped employees to keep all their tips and must not allow non-tipped employees to participate in tip pools.
- The voters of Washington, D.C. approved Initiative 77, which is a measure to raise the tipped minimum wage from $3.33 to $15.00 by 2026.
- Initiative 77 is not yet law, with Congress and the City Council both having an opportunity to strike it down.
For More Information
If you have additional questions about Initiative 77, federal law requirements for tipped workers or think you might be the victim of a tipped wage violation, please contact us for a no cost online review of your case.
But if you’re not ready for that step yet, check out our Wage and Hour page and our blog post titled, “Why Are Restaurants Sued So Often for Breaking Wage and Hours Laws?”
