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DC voters approve higher minimum wage for tipped workers

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A controversial proposal to change the pay structure for servers and other workers at Washington's bars and restaurants was approved Tuesday, four years after an identical measure was overturned by the D.C. Council.

Initiative 82 eliminates the so-called tipped wages system in which restaurant owners pay certain staff members well below the $16.10 minimum hourly wage on the assumption that the difference would be made up through customer tips.

Currently, restaurant managers pay some staffers wages as low as $5.35 per hour. If the employees' tips for the night don't raise that income up to the minimum, the employers are supposed to make up the difference.

That two-tiered system will now be phased out and employers will be required to pay every staffer at least the $16.10 minimum wage by 2027. With more than 40% of the expected vote in, the initiative had received more than 66,000 votes of approval compared with around 22,000 votes against.

An identical initiative was approved in 2018 by voters in 2018. But it was almost immediately reversed by the D.C. Council and Mayor Muriel Bowser in a rare move that drew accusations of backroom influence from the local restaurant association.

Several council members who voted to overturn the previous initiative have publicly stated they would not do so again.

Pay as low as $2.13

While some states have set higher minimums, the federal "tipped minimum wage" has stagnated at $2.13 an hour since 1991 — while inflation has steadily eroded its purchasing power. Despite federal law requiring restaurants to ensure tipped workers end up with the current federal minimum wage of $7.25 an hour, few owners actually make up the difference when workers' tips fall short, and violations of the law are rampant.

Pennsylvania raised its monthly tip threshold in March from $30 to $135, meaning that employers can pay tipped employees less than the state's minimum wage of $7.25 an hour, to as low as $2.83 an hour, only if they make at least $135 a month in tips.

Danny Meyer, CEO of the upscale Union Square Restaurant Group, announced in 2020 that his restaurants would be moving away from a five-year-long no-tipping policy when they reopened in March of that year. The company, which owns Gramercy Tavern and Union Square Cafe, laid off more than 2,000 workers after New York ordered restaurants to close during the pandemic

Concerns that workers wouldn't return without the lure of gratuities were a big factor in the decision to reinstate tipping, Meyer said on LinkedIn at the time.

In the District, the dynamic is more complex than merely labor vs. management; the debate has divided the staffs of restaurants and bars. Many waiters and bartenders oppose it since they currently earn well above the minimum on tips and fear those tips would shrink if an extra service charge is imposed. 

Supporters of the Washington proposal claimed the change will offer protection and equal footing for all employees, while opponents — including the local restaurant association — warn that the extra expense will drive up costs, force smaller independent restaurants to close and lead to extra charges that would drive away customers and discourage high-end tipping.

Geoff Tracy, a prominent local chef with two restaurants in D.C., opposes the measure, but he stops short of predicting it will lead to layoffs or restaurant closures. Rather he described it as providing the illusion of change without actually accomplishing much.

Tracy said servers and bartenders in his restaurants make below $6 per hour, but after tips the servers average $36 per hour and the bartenders make more than $40. He predicted that adding another $10 per hour to their base pay would simply force a new service charge, drive down tipping and, in the end, everybody would be making about the same amount or less.

"I'm not really a big fan of raising prices on my customer base," Tracy said. "Really the only beneficiary will be the District of Columbia, which is going to charge 6% taxes on all these new service charges."

Ryan O'Leary, one of the leaders of the pro-Initiative 82 campaign and a former tipped server, said the initiative was meant to protect some of the most vulnerable members of the hospitality industry. O'Leary said the strongest internal opposition has come from "really well-established bartenders who are at the top of the pecking order."

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