On November 8, 2022, Washington, D.C., voters approved “Initiative 82”, which will eliminate the tip-credit in D.C. 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 phase out was originally set to begin on January 1, 2023, but has been delayed to May 1, 2023, due to the fact that the District’s laws are generally subject to Congressional review, and the delay in electing a speaker of the house caused a delay in the review process.
This means that the minimum base wage for tipped employees remains $5.35 per hour through April 30, 2023. The following is a revised schedule of the graduated increases:
- May 1, 2023: $6 per hour
- July 1, 2023: $8 per hour
- July 1, 2024: $10 per hour
- July 1, 2025: $12 per hour
- July 1, 2026: $14 per hour
- July 1, 2027: regular minimum wage
Next Steps for Employers
Covered employers have more time before needing to adjust their practices but should take note of these changes and be prepared to adjust their payroll practices and procedures to ensure compliance with these new rates by May 1, 2023.
As a reminder, employers are required to 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.