Washington Lawyer - September 2016 - 19

Efforts to raise the minimum wage have created a hot political issue in both national and local elections, fueling a fierce debate on the impact of new minimum wage laws on workers and businesses. In the midst of a combative political season, one thing seems clear: While minimum wage legislation will affect various workers and industries in different ways, there is no doubt such laws will have a profound effect on the restaurant industry. In Washington, D.C., the drive to raise the minimum wage gained momentum this past summer, culminating in June when the D.C. Council unanimously approved a consensus minimum wage bill and Mayor Muriel Bowser signed it into law. The formal call for an increased minimum wage began in April when Bowser announced her proposal to raise the mandatory pay rate to $15 per hour for general workers by 2020, and $7.50 per hour for tipped employees by 2022 and to 50 percent of the minimum wage in each year thereafter. Once presented to the D.C. Council's Committee on Business, Consumer and Regulatory Affairs, Council members reportedly disagreed with the proposed wage increase for tipped workers. In a report documenting their discussion and resolution of the proposal, Council members sought to balance the economic needs of workers with the economic limitations of restaurant owners who already have to contend with challenging profit margins. Photo: Getty Images "The Committee believes that increasing the tipped minimum wage to $5.55 an hour will provide more financial stability for tipped employees, as well as being a wage that can be absorbed by the smaller establishments," stated the report. The committee ultimately decided to reduce the proposed tipped wage increase to $5.50 per hour. The proposal was brought before the entire Council and consolidated with other versions of the initiative. Council members voted unanimously to raise the minimum wage for all D.C. employees to $15 per hour, phased in over the next five years. The thousands of tipped workers who keep area restaurants and nightclubs in business also will receive an increase, from $2.77 per hour to $5 per hour by mid-2020. In subsequent years, both minimum wages will increase in proportion to the Consumer Price Index. According to a study by the Economic Policy Institute, these pay raises will affect approximately 114,000 workers in the District. On June 27 Mayor Bowser signed into law the Fair Shot Minimum Wage Amendment Act of 2016, earning praise from President Obama and many others. "Since my first call to raise the wage in 2013, 18 states and D.C. have taken action - action that will help over 7 million American workers. In addition, nearly 50 cities and counties - as well as many of our leading businesses - have acted on their own to boost wages for thousands more workers. That's progress," the president said in a statement. TIPPED WAGE: A 25-YEAR DROUGHT The U.S. Department of Labor defines a tipped worker as one who customarily receives tips totaling more than $30 per month. Businesses employing these workers are generally only required to pay $2.13 in direct hourly wages as long as the direct wages, in addition to received tips, equal or exceed the Federal-mandated hourly minimum wage. If total earnings do not equal the minimum wage, the employer must pay the differential. The tipped wage is relatively new, created under the Fair Labor Standards Act (FLSA). Prior to 1966, employers were under no obligation to compensate their tipped workers at all. The FLSA established the tipped wage to ensure these employees received at least a minimum wage. At the time of its implementation, the tipped minimum wage was equal to at least 50 percent of the regular minimum wage, with the added provision that the tipped wage would increase alongside the minimum wage. That changed in 1996 when the Clinton administration separated the tipped and general minimum wages. Therefore, as the minimum wage has periodically increased, federal mandates for the tipped wage have remained the same. The tipped minimum wage has stayed frozen at $2.13 per hour since 1991. * WASHINGTON LAWYER * SEPTEMBER 2016 19 http://www.epi.org/publication/raising-the-d-c-minimum-wage/ http://www.dcbar.org/

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