Legal Alert: Phase-Out of Tipped Minimum Wage in D.C. & Reminder of Tipped-Worker Compliance Obligations

In November 2022, D.C. voters passed Initiative 82, the District of Columbia Tip Credit Elimination Act of 2021, which phases out the tipped minimum wage over approximately four and a half years. Currently, D.C. minimum wage is $16.10 per hour. Employers with tipped workers may pay these workers a base wage of $5.35 per hour; if the workers’ tips do not bring their average hourly wage over the course of a work week up to minimum wage, the employer must directly pay any wage to make up the difference. Of course, employers are permitted to pay tipped workers more than the base wage required by law and can decide to eliminate tipping in their business.

Beginning in May 2023, the tipped wage will begin to gradually approach D.C.’s minimum wage until it is eliminated entirely. On May 1, 2023, employers must pay tipped workers a base wage of no less than $6 per hour, which will increase to $8 per hour on July 1, 2023, $10 per hour on July 1, 2024, $12 per hour on July 1, 2025, $14 per hour on July 1, 2026, and D.C.’s standard minimum wage on July 1, 2027.

Additional Related Requirements
In accordance with the Tipped Wage Workers Fairness Amendment Act (the Act), aimed at protecting tipped workers from sexual harassment and wage theft, employers also have existing obligations that will continue.

Employers with tipped workers are required to maintain a sexual harassment policy, provide the policy to workers, and make the policy accessible to employees in the workplace. Employers must submit their sexual harassment policy to the D.C. Office of Human Rights by 11:59 p.m. ET on March 31, 2023.

The Act also requires employers with tipped workers to keep track of and report the number of sexual harassment claims, including the role of the alleged harasser. Claims made in 2020, 2021, and 2022 must be submitted to the D.C. Office of Human Rights by 11:59 p.m. ET on March 31, 2023.

Both claim counts and harassment policies must be submitted online.

Because the submission requires registration of an account for the business, employers are strongly encouraged to set up their account as soon as possible.

In addition, there are training requirements for tipped workers and employers. First, within 90 days, new hires must undergo live virtual or in-person training on Equal Employment Opportunity, sexual harassment, responding to, intervening in, and preventing harassment in the workplace, and reporting potential violations. Further, workers, owners, and operators must undergo the same live virtual or in-person training at least once every two years. Lastly, managers must complete training on the same topics in-person at least once every two years.

The trainings must be conducted by a D.C. Office of Human Rights-certified trainer. Within 30 days of training completion, employers shall submit the training completion report to tipsdc@dc.gov. Currently, the deadline for training compliance is August 31, 2023.

Lastly, employers with tipped workers shall submit quarterly wage reports to the D.C. Department of Employment Services within 30 days of the calendar quarter ending. The wage report shall certify that each tipped worker was paid at least minimum wage, including tips, and include, for each tipped worker: name; average hourly wage per week during the quarter; total hours worked at or above minimum wage per week; gross wages received per week; and total tips received per week. If the employer has a tip-sharing policy, the policy in effect for the quarter must also be provided. Hotels may submit the report themselves, however, third-party payroll providers must submit the report for other businesses with tipped workers.

Additional information for nonprofits and small businesses is available at the D.C. Bar Pro Bono Center’s resource website: www.lawhelp.org/dc/NPSB.

If you have questions, feel free to contact us at npsb@dcbar.org.

© D.C. Bar Pro Bono Center 2023

This communication is provided by the D.C. Bar Pro Bono Center solely for informational purposes, without any representation that it is accurate or complete. It does not constitute legal advice and should not be construed as such. It does not create an attorney-client relationship between the recipient and any other person, or an offer to create such a relationship. This communication contains information that is based, in whole or in part, on the laws of the District of Columbia and is current as of the date it is written. However, laws vary from state to state and may change from time to time. As a result, the information may not be appropriate for anyone operating outside the District of Columbia and may no longer be timely. Consult an attorney if you have questions regarding the contents of this communication.