D.C.'s Initiative 82 spurs another battle over tips

Come November, D.C. voters will decide whether to raise the minimum wage for tipped workers through Initiative 82. 

Sound familiar?

Flashback: A similar measure by a different name, Initiative 77, passed in 2018. It was later overturned by the D.C. Council. 

Driving the news: Legal battles surrounding the measure have continued this time around. The D.C. Court of Appeals last week denied Initiative 82 opponents their last chance to keep the measure off the ballot. 

Catch up quick: Currently, employers of tipped workers can take advantage of the tip credit. That means employers can pay less than minimum wage (about $5 an hour) as long as each worker's hourly wage plus tips meets or exceeds the minimum wage.

• If the credit were eliminated under the ballot measure, employers would have to pay by 2027 the standard minimum wage (currently $16.10) regardless of what workers earn in tips, with steady increases each year between now and then.

Why it matters: Initiative 82 would create a fundamental shift for workers who’ve traditionally relied on tips for the bulk of their income and could have far-reaching effects on the dining scene. 

Supporters of the measure, like Paul Schwalb with Local 25 – a union representing 7,500 hospitality workers in D.C. – say inflation and the rising cost of living make higher baseline pay even more critical for tipped workers. Others argue that eliminating the tipped wage credit would greatly benefit back-of-house staff by evening the playing field, as front-of-house staff generally make significantly more.

• “There’s a long history in this country of people who are employers who cry every time a wage goes up … and they pull their hair out and they say that the sky is falling,” Schwalb tells Axios. “At the end of the day, they find ways to follow the law.”

The other side: Opponents — which include the Restaurant Association of Metropolitan Washington — argue that raising baseline pay would harm D.C.’s many independently operated restaurants, potentially pushing owners to cut staff or raise prices, and leading patrons to tip less.

• Opponents also say that the measure could cause restaurant workers to make significantly less money. D.C. waiters currently make an average of $23.19 an hour,  $7 more than minimum wage. 

In a Washington Post op-ed, RAMW president Kathy E. Hollinger argued that well-funded outside special interest groups are recycling a “bad idea” at the “most vulnerable time for our small businesses and their employees.”

What's next: Groups for and against the initiative have raised hundreds of thousands of dollars to convince D.C. voters to side with them. Expect to see increased messaging from both sides ahead of the election in November.