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District of Columbia Voters Approved Elimination of Tip Credit

On November 8, 2022, Washington, D.C., voters approved “Initiative 82,” which, once certified and implemented, will eliminate the tip-credit in D.C. Under Initiative 82, the tipped minimum wage rate which is currently $5.35/hour will gradually increase until 2027 to match the minimum wage of non-tipped employees which is currently $16.10/hour.

The following is a schedule of the graduated increases, the first of which is set to begin on January 1, 2023:

  • $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; and
  • $14 per hour on July 1, 2026.

Effective July 1, 2027, tipped employees will earn the same base wage as non-tipped employees.

The campaign for Initiative 82 focused almost entirely on the restaurant industry; however, it would affect all tipped employees, including restaurant servers, bartenders, hairdressers, bellhops, valets, barbers and nail salon workers.

Next Steps for Employers

Employers with tipped employees must take note of these changes and should prepare to adjust their payroll practices and procedures to ensure compliance with these new rates by January 1, 2023.

As a reminder, employers are required track tips to ensure workers earn at least the minimum wage for all hours worked. Where tips earned by an employee do not equate to an employee having received at least minimum wage for all hours worked, employers are required to make up the difference if an employee’s combined wages and tips do not reach minimum wage levels.

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