NEW LAW – Washington DC Elimination of Tip Credit Repealed

Back in June 2018, Washington DC voters passed Initiative 77, which was intended to gradually eliminate the “tipped employee minimum wage” (or tip credit) by 2026.  That Initiative has officially been repealed.

Earlier this month, the D.C. Council passed a measure to overturn and repeal Initiative 77.  This means that employers in Washington DC will be able to continue paying their tipped employees a lower minimum wage than regular hourly workers.

Currently the tipped minimum wage in Washington DC is $3.89 per hour.  This minimum wage is slated to increase as follows:

  • July 1, 2019 – increases to $4.45 per hour
  • July 1, 2020 – increases to $5.00 per hour

On July 1, 2021 (and on July 1st of each year thereafter) – The tipped employee minimum wage shall be increased in proportion to the annual average increase, if any, in the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area published by the Bureau of Labor Statistics of the United States Department of Labor for the previous calendar year.

In addition to repealing Initiative 77, the Act also imposes the following wage and hour requirements relating to tipped employees:

  • Requires the Mayor to
    • create a website describing the various District wage and hour and anti-discrimination laws;
    • launch a public education and awareness campaign concerning the rights of tipped workers; and
    • create and staff a hotline to receive wage-specific complaints;
  • Mandatory Training Regarding The Minimum Wage Act Revision Act Of 1992
    • All business owners or operators who employ tipped workers and all managers in these businesses are required to participate in annual training on the District’s wage payment and collection law (The Minimum Wage Act Revision Act Of 1992)
    • These employers are also required to offer its employees the opportunity to attend or complete this training. This offer must be extended on at least an annual basis
    • Employers must submit a certification of compliance with this training requirement to the Department of Employment Services by December 31st of each year .
  • Itemized Pay Statements
    • Employers must provide an itemized statement containing specific wage and hours worked information.
    • Employers must provide each tipped employee with a “tip out” sheet each payday identifying the amount or percentage of tips (both cash and credit card tips).
    • This statement must be provided with each wage payment.
  • Quarterly Reporting of Tipped Employee Wages
    • Until January 1, 2020, (non-hotel) employers must submit a quarterly report to the Mayor certifying that each employee was paid at least the required minimum wage, including gratuities.
    • This report must be submitted no later than 30 days after the end of the quarter and must contain the following employee-specific information (for all employees – not just the tipped workers):
      • Hours worked per week by each employee;
      • Total pay for each employee, including gratuities;
      • Average weekly wage of each employee; and
      • The employer’s current tip-out policy. Of note, this requirement appears to apply to all employees of the employer, not just tipped workers.
  • Third-Party Payroll Administrators
    • Beginning in 2020, all employers of tipped employees (other than hotels) will be required to use a third party provider to perform payroll services for the employer
      • This third party provider (or the hotel) will be required to report certain wage data, including the employer’s tip- out policy, to the Department of Employment Services (DOES) on a quarterly basis; and
  • Creates the Tipped Workers Coordinating Council, a “partnership of tipped worker [advocates], employers, and public agencies that promotes a high-quality response to tipped worker cases of wage theft and unfair labor practices.”