The lawmaking body for the District of Columbia voted yesterday to preserve the jurisdiction’s tip credit, protecting a significant wage break for full-service restaurants—at least for now.
The 8-5 vote by the Council for the District of Columbia overturns residents’ approval of a June 19 ballot initiative calling for a discontinuation of the credit. The proposal they passed that day, Proposition 77, called for raising the wages directly paid to all local hourly workers, including servers and other tipped employees, to $15 an hour by 2026.
The change was expected to raise restaurants’ labor costs exponentially. Currently, the district’s minimum wage is $12.50 an hour. Restaurants and other employers are required to pay tipped workers only $3.33 per hour if the other $9.17 legally due the employee is provided in the form of gratuities from guests. Businesses lost that credit under Proposition 77.
Yesterday’s vote overturned the referendum legislatively, an unusual but not unheard-of occurrence in government. Lawmakers argued that a legislative remedy was necessary because the wording of Proposition 77 was misleading to voters. For instance, Council Chairman Phil Mendelson said in a statement, the initiative stated that all employees would be entitled to the same minimum wage if the proposal passed. All employees are already due the whole minimum wage; servers just collect a portion of it from tips rather than direct pay, Mendelson asserted.
He also cited Proposition 77’s claim that approval would raise the minimum wage to $15 an hour. A law raising the legal minimum to $15 is already on the books, said Mendelson.
Labor advocacy groups such as Restaurant Opportunities Centers United argued vehemently that disallowing the tip credit was a necessary defense for servers, particularly women, since female employees may be reluctant to deflect sexual harassment if it costs them tips.
Restaurants have argued that the tip credit is a necessary convention for helping them afford a staff, and would likely result in the elimination of jobs if it was taken away.
They also cite the wide discrepancy in the compensation of kitchen workers and servers, who routinely make two or three times what a back-of-house hourly might. That gap would be widened if servers were directly paid a full wage on top of what they collect in tips.
The situation in Washington prior to the June 19 vote was seen as a microcosm of the conflict raging between labor advocates and the restaurant industry in many jurisdictions nationwide. Proposals to kill the tip credit are expected to be on the ballots of some cities and states in November elections.
The district bill approved yesterday by the Council has yet to be signed into law by Mayor Muriel Bowser, an acknowledged opponent of Proposition 77.
Even if Bowser should enact the law, chances of a court challenge are likely because the legislative move runs directly contrary to a popular vote. Residents approved Proposition 77 by a landslide, with 55% voting in favor.
However, a legislative reversal of a referendum vote to kill the tip credit has stuck in Maine, where servers lobbied hard to reinstate the break.