Hey Compliance Warriors!
Tipped employees are set to get a big pay raise over the next 8 years. On June 19, 2018 Initiative Number 77 was approved. Read on for all the details…
Article via: www.mondaq.com
“The Status Quo
Washington, DC’s minimum wage is currently $12.50 per hour and is scheduled to increase to $13.25 per hour on July 1, 2018. Employers need only pay tipped employees $3.33 per hour, however, provided that employee tips make up the $9.17 per hour balance.2 If an employee does not earn at least $12.50 per hour inclusive of tips, an employer must make up the difference.
Initiative 77
Initiative 77 gradually increases minimum wage requirements for tipped employees on an annual basis through 2025. Specifically, employers must provide tipped employees with the following minimum hourly wages:
As of July 1, 2018: $4.50
As of July 1, 2019: $6.00
As of July 1, 2020: $7.50
As of July 1, 2021: $9.00
As of July 1, 2022: $10.50
As of July 1, 2023: $12.00
As of July 1, 2024: $13.50
As of July 1, 2025: $15.003
As of July 1, 2026, the separate tipped minimum wage will be eliminated completely, and employers must provide tipped employees with a minimum hourly wage equal to that of non-tipped employees. Because the DC minimum wage for non-tipped employees is scheduled to reach $15 per hour by July 1, 2020—and will likely increase more by 2026—the minimum wage for tipped employees as of July 1, 2026, may increase substantially beyond $15 per hour.
The requirements to increase the tipped minimum wage do not apply to District of Columbia employees or those employees working on District of Columbia government contracts.
Employer Outlook
Initiative 77’s effective date—or whether it will even take effect at all—remains uncertain at this time. Before it can take effect, Initiative 77 must first be sent to the US Congress for a mandatory 30-day review period. Under the DC Home Rule Act, Congress has the ability to block implementation of the measure (though it rarely utilizes this power). Because the congressional review period counts only those days where Congress is actually in session, Initiative 77’s likely effective date is unknown.
In addition, news reports indicate that several DC councilmembers, as well as the District’s mayor, oppose Initiative 77, and that the DC Council may consider passing legislation either reinstating the two-tiered minimum wage system or extending the ramp-up period before Initiative 77 takes effect. DC employers should continue to monitor developments related to Initiative 77’s effective date—as well as any actions by the DC Council concerning related legislation—over the next few months.
In the meantime, DC employers should immediately review their employee rosters in order to identify the positions affected by Initiative 77, and should also confer with their payroll provider to ensure a smooth transition for affected employees before Initiative 77’s effective date.”
For More Information:
http://www.mondaq.com/unitedstates/x/714026/Employee+Benefits+Compensation/DC+Voters+Approve+Ballot+Measure+Eliminating+Tip+Credit
Until Next Time, Be Audit-Secure!
Lisa Smith
