Aug 22, 2023 - Business

Montgomery County to join tipped minimum wage fight

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Illustration: Aïda Amer/Axios

The fight to raise the minimum wage for tipped workers is escalating in Maryland.

What's happening: Legislation will soon be introduced in Montgomery County, Prince George's County, and others that could increase what employers must pay tipped staff.

Why it matters: As we're seeing in D.C. with Initiative 82, such laws overhaul how tipped workers are compensated and businesses function — especially in restaurants and bars, where tipping culture is ingrained.

  • If the bills pass in D.C.-area counties, expect a growing regional impact on Washington's dining scene.

Driving the news: Montgomery County Council member Will Jawando told Axios he plans along with fellow council member Kristin Mink to introduce a bill in mid-September to phase out the tipped minimum wage.

  • Shadowing D.C.'s Initiative 82, the bill proposes raising the tipped minimum wage incrementally, starting with a bump to $4 and then $8 in July of next year. That would be followed by $2 yearly increases until 2028.

Between the lines: Jawando emphasized the need to collaborate with small businesses for how to best implement new laws, as well as possible similar legislation that could provide support for business owners.

  • "We can pay people a living wage and have a strong restaurant industry, and what's happening in other parts of the country proves that."

Catch up quick: Maryland raised the state minimum wage this year to $13.25 an hour — a hike that excluded the tipped minimum wage, which has remained at $3.63 for nearly a decade.

  • Employers are required to make up the difference for any tipped workers who fall short of the minimum wage.

Yes, but: That law is routinely broken, and tipping disadvantages minority and women workers, according to One Fair Wage. The nonprofit successfully campaigned for I-82 in D.C. and is fighting to end the sub-minimum wage for hospitality workers nationally.

What they're saying: "We're in a moment of incredible revolt and upheaval in the restaurant industry," OFW co-founder Saru Jayaraman tells Axios.

  • "During the pandemic, over a million workers left the industry nationally. They just started refusing to work for sub-minimum wages. Go ahead with all the enforcement you want. It's not going to bring back enough people."

The big picture: Eight states and the District have eliminated or are phasing out the tipped minimum wage.

  • The District's I-82 law went into effect this May — incrementally increasing the tipped minimum wage until 2027 when workers will make at least the same minimum.
  • OFW is currently pushing legislation and ballot measures across the country, from Chicago to Massachusetts.

The other side: The Restaurant Association of Maryland (RAM) is gearing up for a legislative battle.

  • "A statewide tip credit repeal bill considered in the Maryland General Assembly failed to pass earlier this year because of strong restaurant industry opposition and scores of servers who urged lawmakers to reject it because they make significantly more money under the current tipping system," RAM senior vice president Melvin Thompson says in a statement to Axios.
  • "The restaurant industry and servers will continue to oppose such poor public policy proposals in Montgomery County and elsewhere in Maryland."

The intrigue: Servers and bartenders have long battled on both sides of the movement, with many arguing that they make more with traditional tips.

  • The issue is made thornier when restaurants introduce service fees to help cover increased costs, since automatic charges don't necessarily go to tipped staff but can result in customers tipping less.

What's next: Maryland state legislators are looking to upcoming county races, and preparing to take the fight statewide next year.

  • "I think that modeling and showing how it can be done, how it works, and having the good data really sets us up at the state level," Maryland state delegate Lorig Charkoudian tells Axios.

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