Credit: Lauren Heneghan

Under a draft committee print approved today by the D.C. Council’s Committee on Business, Consumer, and Regulatory Affairs, District workers who earn tips would see their base minimum wage raise from $2.77 an hour currently to $5.55 an hour in July 2020, a slight drop from the $7.50 wage in 2022 proposed by Mayor Muriel Bowser.

Since the mayor introduced legislation in April that would raise the general minimum wage to $15 an hour by 2020, labor and restaurant advocates have clashed over whether the tipped minimum wage should increase, or even be eliminated. That fight is likely to persist as the marked-up bill continues through the Council’s process for a full vote. Current law requires business owners to pay their tipped workers the general minimum wage if gratuities don’t suffice.

“The Committee recommends that the tipped minimum wage be increased in annual increments until it reaches $5.55 per hour by July 1, 2020,” At-Large Councilmember and BCRA Committee Chair Vincent Orange said on Wednesday. “Moving to $5.55 per hour will double the tipped minimum wage…and put the District ahead of the surrounding jurisdictions. The committee believes that increasing the tipped minimum wage to $5.55 per hour is the right balance between providing financial stability for tipped employees as well as being a wage that can be absorbed by the smaller establishments.”

Orange added that stronger enforcement of the general-wage guarantee for employees who make gratuities would be beneficial. Still, under the mark-up, the tipped minimum wage would not rise beyond $5.55; the general minimum would continue to rise after 2020 based on the Consumer Price Index. Officials hope the raise will alleviate inequality.

A committee report on the mark-up summarizes both sides of the debate, based on recent D.C. Council testimony:

“Advocates for eliminating the two-tiered wage system mentioned that seven other states have required the tipped workers to be paid the minimum wage before tips and those states have not seen any adverse effects on the restaurant industry. They added that according to the Department of Labor, Bureau of Labor and Statistics the median wage for tipped restaurant servers was just $9.58 an hour. Furthermore, they testified that: the two-tiered wage system is discriminatory; that it creates a lack of financial stability in the lives of tipped workers; not all employees are not earning the minimum wage and those who complain they have not earned the minimum wage are retaliated against.

Advocates for not increasing the tipped minimum wage to $7.50 an hour testified that raising the wage will lead to: increased costs, such as payroll costs; reduction of staff and staff hours; decreased revenue due to increased menu prices, which will discourage patrons from going to an establishment; and forcing some establishments to close or to move outside of the District. Many restauranteurs said their tipped workers make more than the minimum wage and increasing the tipped minimum wage would force them to look at adding a service charge and eliminating tipping. They encouraged the District to enforce the current laws to ensure that tipped workers are being paid the minimum wage. The Committee also heard from some restaurant employees who were concerned that increasing the tipped minimum wage will have a negative impact on them.”

According to Orange, Chief Financial Officer Jeffrey DeWitt gave the revised bill “a clean fiscal impact statement,” which concluded “funds are sufficient” in fiscal years 2016 through 2020 for the District to implement the legislation.

In a statement, Bowser praised the committee’s mark-up saying, “This legislation will put more money in the pockets of working families, and put more people on a pathway to the middle class.” The administration plans to convene a working group of businesses, labor, and policymakers to address the minimum-wage and other economic policies.

“I still have reservations around where we’ve landed on the tipped minimum,” Ward 6 Councilmember Charles Allen said, noting that an increase in the general minimum as well as universal paid family leave would benefit all workers. “Doubling the tipped credit has a very significant impact on the bottom line and the operations of these businesses.”

“There are many other tipped workers who testified about how the system wasn’t working as well for them,” At-Large Councilmember Elissa Silverman pointed out. She added that she hopes the Council will consider “some innovative approaches” like tying the tipped minimum to the Consumer Price Index or, as in Hawaii, allowing “restaurants to take a tip credit against their minimum wage obligations, essentially lowering the tipped wage that they pay their workers, if the employees tips bring them well above the regular minimum wage”: Thriving business pay a smaller minimum.

The committee, which Councilmembers Brianne Nadeau and Brandon Todd also sit on, upvoted the draft print unanimously.