The hourly minimum wage for tipped employees in Washington, DC will gradually increase to $15 by 2025 and reach that of other employees by 2026.
Washington, DC voters on June 19 approved Initiative Number 77 (Initiative 77), also known as the District of Columbia Minimum Wage Amendment Act of 2017, a ballot measure seeking to eliminate the separate minimum wage for tipped employees by 2026. Initiative 77 provides that the DC minimum wage for tipped employees will gradually increase to $15 per hour by 2025, and that tipped employees will be subject to the same minimum wage requirements as non-tipped employees by 2026. If Initiative 77 becomes effective, Washington, DC will become the eighth major jurisdiction to prohibit a separate tipped minimum wage.
The Status Quo
Washington, DC’s minimum wage is currently $12.50 per hour and is scheduled to increase to $13.25 per hour on July 1, 2018. Employers need only pay tipped employees $3.33 per hour, however, provided that employee tips make up the $9.17 per hour balance. If an employee does not earn at least $12.50 per hour inclusive of tips, an employer must make up the difference.
Initiative 77 gradually increases minimum wage requirements for tipped employees on an annual basis through 2025. Specifically, employers must provide tipped employees with the following minimum hourly wages:
- As of July 1, 2018: $4.50
- As of July 1, 2019: $6.00
- As of July 1, 2020: $7.50
- As of July 1, 2021: $9.00
- As of July 1, 2022: $10.50
- As of July 1, 2023: $12.00
- As of July 1, 2024: $13.50
As of July 1, 2026, the separate tipped minimum wage will be eliminated completely, and employers must provide tipped employees with a minimum hourly wage equal to that of non-tipped employees. Because the DC minimum wage for non-tipped employees is scheduled to reach $15 per hour by July 1, 2020—and will likely increase more by 2026—the minimum wage for tipped employees as of July 1, 2026, may increase substantially beyond $15 per hour.
The requirements to increase the tipped minimum wage do not apply to District of Columbia employees or those employees working on District of Columbia government contracts.
Initiative 77’s effective date—or whether it will even take effect at all—remains uncertain at this time. Before it can take effect, Initiative 77 must first be sent to the US Congress for a mandatory 30-day review period. Under the DC Home Rule Act, Congress has the ability to block implementation of the measure (though it rarely utilizes this power). Because the congressional review period counts only those days where Congress is actually in session, Initiative 77’s likely effective date is unknown.
In addition, news reports indicate that several DC councilmembers, as well as the District’s mayor, oppose Initiative 77, and that the DC Council may consider passing legislation either reinstating the two-tiered minimum wage system or extending the ramp-up period before Initiative 77 takes effect. DC employers should continue to monitor developments related to Initiative 77’s effective date—as well as any actions by the DC Council concerning related legislation—over the next few months.
In the meantime, DC employers should immediately review their employee rosters in order to identify the positions affected by Initiative 77, and should also confer with their payroll provider to ensure a smooth transition for affected employees before Initiative 77’s effective date.