Initiative 82 passes: DC tipped workers to be paid minimum wage

D.C. residents voted Tuesday to pass Initiative 82, which will require D.C. employers to pay $16.10 an hour to tipped employees regardless of how much they earn in gratuity. 

Previously, tipped workers made $5.35 as long as they make enough tips to meet the $16.10 threshold. The new pay increase will be phased in over five years. By 2027, employers will have to pay the full minimum wage to employees. 

What will this look like for customers? Chef Geoff Tracy tells FOX 5 this could look different in every business you go to, once implemented. He hopes industry leaders come up with some kind of suggested standard.

"There’s no bucket of money that at the bottom of the restaurant [profit and loss statement] where you can afford what is essentially a $21,000 increase per tipped employee at your restaurant," Tracy said. "Back of the napkin for us, it’s about – it’s a little over $400,000 for this restaurant alone … It’s just not there. So that money has to come from somewhere, and it’s going to come from the customer, sort of the same way in the past. But some of it’s going to come in the form of a service charge. Some of it’s going to be in the form of gratuity and hopefully, the servers will continue to be making, you know, the kind of good money that they’re making now."

Restaurant owners gave the example of this looking like a 10% service charge on the bill plus gratuity. This could also increase as pay increases are phased in.

"Well right now it’s happening at 2 Amys and people just are satisfied, so my answer is they’ll probably go with the additional charge added and a smile," said a man outside of Chef Tracy’s Chef Geoff’s restaurant in Northwest D.C.

"If somebody provided good service during a meal, why not recognize that?" said a young woman who told FOX 5 she would still tip regularly with a more expensive bill. A majority of people agreed. There are a few who also admit to deducting from the tip due to the service charge.

"With the pandemic and the great resignation, 1.2 million workers have left the industry nationally and thousands of workers have left the industry in D.C. and in response, thousands of restaurants nationally and restaurants in D.C. have already raised their minimum wage to a full minimum wage with tips on top [in order to prevent losing staff during the worker crisis]," said Saru Jayaraman, an Initiative 82 proponent with the group One Fair Wage. 

Jayaraman also pointed to at least 7 other states that did away with tipped minimum wage in their jurisdictions.

She and other supporters argue Initiative 82 will help retain or return workers to the restaurant industry since more people are unwilling to work for "poverty" or "sub-minimum wages."

"We know from so many years of research on tipping, customers generally don’t care, nor do they ask how much you’re making before making a decision about how to tip. That’s not what tipping is based on," Jayaraman said. 

"The general public I think missed, and it wasn’t explained well," said Medium Rare owner Mark Bucher. "Our guys are making $40, $50, $60 dollars an hour right now. The premise was that that was not the case. That if they made $5 an hour and they made $2 in tips, they only made $7 an hour. That’s false. That does not happen, it can’t happen. I can’t say some people don’t do it, whether it’s a salon owner or a restaurateur, those people need to be handled and maybe that’s what this should’ve been dealing with."

Bucher believes Initiative 82 could decimate the District’s restaurant industry and hurt Downtown D.C. if customers start avoiding D.C. to pay less for drinks and meals in other popular areas, like Arlington.

Both Bucher and Tracy say they’re not planning to lay off employees and are working on how to implement Initiative 82 changes.

In 2018, the D.C. Council overturned a similar measure passed by D.C. voters. This time around, a majority of council members tell FOX 5 they support Initiative 82 and have not heard of any rumblings to introduce a repeal bill.

"I must confess. I know the issue and I know the issue inside and out but when I read it on the ballot, I was quite confused by it. So I think there’s going to – and what we would be willing to do is partner with the industry to facilitate conversations to ensure that there is robust public education," said D.C. Mayor Muriel Bowser when asked on Tuesday what her thoughts are of the measure passing and how she can guarantee voters’ wishes will not be overturned again.

Restaurant servers, bartenders, bar backs, nail salon workers, parking attendants, are all examples of who could be impacted.

Once the D.C. Board of Elections certifies the votes, the measure will go to the D.C. Council to stamp off and send to the next congressional session.

Tracy tells FOX 5, "One of the things I really think is important to know is that as people start implementing service charges, those are taxed. They receive sales tax on that. And so I really hope the council will come up with some way of eliminating sales tax for service charges in restaurants in the future because otherwise, it’s just sort of an unnecessary windfall for the D.C. budget."

He also said it’s going to be important for restaurant owners to be clear with their customers on where the service charges are going.

"We're going to work to keep our customers happy. We’re going to figure out the math and figure out how this works. And the general public in D.C., they voted for this," Bucher said. "They’ve now got to be understanding and not get mad at us."