District of Columbia Voters Approved Eliminating the Tipped Minimum Wage in an Effort to Combat Wage Theft, but the Popular Measure May be Annulled

On Behalf of | July 16, 2018 | Overtime Law, Wage & Hour

Hourly workers’ paychecks can be unpredictable, varying drastically depending on their hours. Unscrupulous employers exploit this variance to short hourly employees of their full wages for their labor, often undetected.

Tipped workers in most states are uniquely vulnerable to wage theft.  Most tipped workers earn a reduced hourly rate – in Washington, DC, the tipped rate is currently $3.89 per hour.  For some workers, the tips they earn bring that hourly rate to the District minimum wage ($13.25 per hour) or above.  But for many, tips aren’t enough, and employers are required by law to pay employees the difference between what the employee actually earned and the minimum wage.  The extra bookkeeping required leaves ample room for employers to commit wage theft.

Like many employment violations, the challenge lies in enforcement.  It can be extremely difficult for employees to discover that they have been paid less than the minimum wage, and then to successfully recover those wages from their employers.  Many employees, fearing retaliation, don’t speak up at all.  If they do, they may often find enforcement of their right to the minimum wage time-consuming and costly.  The government can and does help combat wage violations, but the DC Office of the Attorney General only received authority last year to initiate its own wage theft cases.  Robust enforcement could greatly scale down the problem, but enforcement resources are limited.

In June of this year, in an effort primarily targeted at reducing wage theft against tipped workers, DC residents went to the polls and voted to raise the tipped rate to match the regular minimum wage, joining a handful of states that have already done away with a lower tipped rate.  The measure would gradually increase the tipped rate starting in 2021 to meet the regular rate by 2026.  The measure could reduce the poverty rate of tipped workers – which is greater in states that have a lower tipped minimum wage than in states with a single minimum wage –  and could mitigate racial and gender inequities.  Tellingly, the DC measure passed despite predominately wealthy and white precincts voting against it.  The primary concern of those voters has likely increased labor and business costs, but studies indicate that affected businesses in states with a single minimum wage are able to absorb the costs in various ways without significantly reducing employment or dramatically increasing prices.

Nonetheless, despite broad support, DC’s voter-approved measure is in jeopardy.  The majority of the DC Council and the mayor voiced opposition prior to the vote, and the DC Council introduced a bill last week to annul the measure.

If you believe you have been denied wages in the District of Columbia or elsewhere, contact an experienced employment attorney at Sanford Heisler Sharp which has offices in Washington, DC, New York City, Baltimore, Nashville, San Francisco, and San Diego.