Let’s Fix DC’s Tip Credit Wage Too

I’m trying to write shorter posts — with mixed success, as followers can attest. But trying I am. So I cut a piece out of my recent post on DC Councilmember Wells’s “living wage for all” plan. Here’s the gist.

As I’ve already said, the plan would, among other things, increase the District’s minimum wage and then link it to a cost-of-living index so that it would no longer lose real-dollar value over time.

It’s hard to say how many workers would benefit — in part because Wells says he’ll also propose a “living wage” requirement for large employers (rate and “large” still undefined).

What we do know is that thousands of workers may not benefit unless the bill does something about the District’s tip credit wage, i..e., the subminimum cash wage that employers can pay workers who customarily receive tips.

Here in the District, that’s $2.77 an hour — only a third of the full minimum. This is lower than the ratio in all but four states that have set their own tip credit wages.

Employers are supposed to top off the tip credit wage if workers don’t get enough in tips to bring their total gross pay up to the regular minimum.

But the sheer complexity of tip tracking, combined with permissible practices like tip pooling, i.e., divvying out all tips rather than letting each worker keep what s/he received, leaves workers highly vulnerable to a form of wage theft.

And it’s hard to prove for the same reasons it’s easy to commit.

This, says the National Employment Law Project, is why it’s so important to have a strong minimum wage base for tipped worker income.

Ideally, the District would join the seven states that have no tip credit wage, as NELP’s brief strongly suggests.

Failing that, it could phase in a tip credit wage increase and then link it to the full minimum, as 20 states have already done. This would keep the gap from widening again. Another “fix it and forget it” solution.

The Fair Minimum Wage Act that’s stalled in Congress would gradually phase in a tip credit wage increase until it reached 70% of the regular federal minimum. The wage would then increase whenever the regular minimum did so that the ratio would remain the same.

That seems like a good model to me.

3 Responses to Let’s Fix DC’s Tip Credit Wage Too

  1. zoom314 says:

    Sounds good to Me and I like your posts.

  2. […] what seems to be serious consideration of raising the District’s minimum wage — and its tip credit wage too […]

  3. […] to pay them $15 an hour — even if they regularly receive tips and can thus legally be paid as little as $2.77 […]

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