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Washington, D.C., votes to end its tip credit

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Tipped restaurant employees in Washington, D.C., will see their direct wages climb to $15 an hour as a result of District residents’ vote yesterday to eliminate the tip credit.

The District becomes the eighth state-scale jurisdiction to forgo the credit, which enables restaurant employers to count an employee’s tips toward the minimum wage. Yesterday’s referendum was seen as a test of how other cities and states may vote on similar proposals.  Efforts to scuttle the tip credit have made headlines in Philadelphia, Dallas, Massachusetts and the state of New York, the industry’s fourth largest market.

Servers in the District are currently paid at least $3.33 an hour directly by their employers. Restaurants can count the employees’ tips toward the rest of the $12.50 they’re due as a minimum hourly wage under local law. If a tipped staff member isn’t left at least $9.17 in gratuities per hour, the employer makes up the different.

The wage paid directly by employers to tipped employees will rise in eight increases to $15, the targeted minimum wage for all District workers, by 2026.

Federal wage laws require employers of tipped employees to pay those staffers at least $2.13 per hour directly, with tips counting toward the rest of the $7.25 national hourly minimum. The states that opted out of that model before the District are California, Minnesota, Washington, Oregon, Nevada, Montana and Alaska.  

Residents of Washington, D.C., voted 55% to 45% to end their tip credit. The vote followed heavy lobbying for the measure by One Fair Wage, a coalition of labor and community works that backed by the Service Employees International Union and its affiliated advocacy group, Restaurant Opportunity Centers United. Restaurateurs and local servers pushed for defeat of the measure, in part through the efforts of the employee-backed group called Save Our Tips. That organization grew out of a successful attempt by servers in Maine to reinstate the tip credit after residents voted in a referendum to disallow it. The workers said their pay dropped precipitously after the credit was scuttled because customers stopped tipping.

CityLab.com, a District news site, predicted the local situation would “settle a national debate over tipping.”

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