Early this week, a majority of Washington, D.C. voters approved a ballot initiative called the "District of Columbia Minimum Wage Amendment Act of 2017" or "Initiative 77," which will gradually raise the minimum wage for tipped workers in the District until it reaches $15 per hour in July 2025.
Currently under both D.C. and federal wage hour laws, employers are permitted to take a "tip credit" against the established minimum wage for employees who "regularly and customarily receive tips" (servers, hosts, bartenders, etc.), paying the employee a reduced minimum wage and having the tips make up the difference. Where the employee does not receive adequate tips to reach the hourly minimum wage in any workweek, the employer must make up the difference.
If Initiative 77 goes into effect, it will gradually eliminate the option for D.C. employers to take the tip credit.
The current sub-minimum wage for tipped workers is $3.33 per hour. The schedule for minimum wage increases under Initiative 77, which will require employers to increase the wages they pay their tipped workers by $1.50 each year beginning this July, through July 2025, when it would reach $15. However, as of 2026, tipped worker wages would have to match the general D.C. minimum wage, which is indexed to increase yearly in proportion to the consumer price index starting in 2021. The initiative was sponsored by a coalition of union and self-styled "Workers' Rights" groups. Despite the visceral appeal to some voters, it could lead to a significant decrease in tips for employees, and a significant increase in cost to employers. Many tipped employees campaigned against the initiative.
The increase will apply to all tipped workers in the District, except those who are District government employees or the employees of District government contractors, because no ballot initiative may require expenditure of public funds.
Initiative 77 is not a law yet. The D.C. Board of Elections must officially certify the provisions of Initiative 77. It will also be submitted to Congress for a 30-day review, counting only the days Congress is in session. If Congress does not act, Initiative 77 will take effect during the next review period. Even if it does take effect, D.C. City Council has the authority to pass its own bill that could change the approved legislation and restore the tipped wage system. Ten members of Council came out publically against Initiative 77 when it was introduced. Opponents of Initiative 77 will certainly lobby the Council to take action to nullify the initiative arguing that in addition to hurting the industry and tipped employees the initiative presented on the ballot was misleading, and most voters don’t understand how the tip credit works.
