Voters in the District of Columbia on June 19, 2018 approved an initiative (Initiative 77) that would incrementally increase the minimum cash wage for tipped workers to $15.00 per hour by July 1, 2025, and starting July 1, 2026 to the same amount as the then-minimum wage for all other workers, effectively eliminating the tip credit. If the initiative takes effect, the District would join seven states that do not have a separate minimum wage for tipped workers, i.e., Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.

The D.C. Council previously enacted legislation raising the minimum cash wage for tipped workers to $3.33 on July 1, 2017; $3.89 on July 1, 2018; $4.45 on July 1, 2019; and $5.00 on July 1, 2020, consistent with increases in the general minimum wage to $12.50, $13.25, $14.00, and $15.00 that will take effect on the same dates. Each year thereafter, the minimum wage will increase in proportion to the annual average increase in the CPI-U for the Washington area. D.C. Code §32-10003.

The voter initiative would change the minimum cash wage for tipped workers to $4.50 on July 1, 2018; $6.00 on July 1, 2019; $7.50 on July 1, 2020; $9.00 on July 1, 2021; $10.50 on July 1, 2022; $12.00 on July 1, 2023; $13.50 on July 1, 2024; $15.00 on July 1, 2025; and to whatever the minimum wage then is for other workers on July 1, 2026. These provisions will not apply to employees of the District of Columbia, or employees performing services under contracts with the District of Columbia.

It is not yet clear whether the initiative will become law, at least it its present form. It passed by only 55 percent in an election in which turnout was only 16.7 percent. Before it becomes law, it must clear review by the D.C. Council, which could amend or overturn it. So far, the measure has faced public opposition from Mayor Muriel Bowser and a majority (eight) of the D.C. Council, as well as many restaurant owners, wait staff and bartenders, who fear it will increase direct labor costs, force staffing reductions, and significantly reduce the amount of tips received. Both the Restaurant Association of Metropolitan Washington and the separate “Save our Tips” campaign already have stated that they will take their fight to the Council. If the Council approves the measure, it must then clear a thirty-legislative-day review period by the Congress. At best, the initiative is not likely to take effect until sometime in the fall of 2018.

In the meantime, employers currently taking the tip credit should note the increase in the minimum for tipped employees to $3.89 (and for all other employees to $13.25) taking effect on July 1, 2018. Notably, supporters of the initiative have stated that they will not seek retroactive effect of the initiative’s July 1, 2018 increase to $4.50.

[Read the update—July 16, 2018—“Proposed D.C. Council Legislation Puts Voter-Approved Elimination of Tip Credit Into Question.”]

Oregon Creates Three New Minimum Wage Rates

On March 1, 2016, Oregon Governor Kate Brown signed a law raising the state’s minimum wage. The law is an unusual one, and it will create challenges for many employers with employees in the state, particularly those with operations or employees in multiple counties.

The first increase to the state’s minimum wage will take effect on July 1, 2016, with a new increase scheduled to take effect each July thereafter. The law provides a schedule of annual increases through 2022. Beginning in 2023, the minimum wage will be adjusted annually to account for inflation.

Oregon Minimum Wage Schedule

Starting July 1, 2016, the Oregon minimum wage will be $9.75 per hour in most—but not all—of the state. The minimum wage in 18 enumerated “nonurban counties” will be $9.50 per hour.

Oregon Nonurban Minimum Wage Counties

Beginning on July 1, 2017, Oregon will have three distinct minimum wage rates: $11.25 per hour in the Portland metropolitan area; $10.00 per hour in nonurban counties; and $10.25 in the remainder of the state. Annual statutory increases will continue through July 1, 2022 when the minimum wage rates will be: $14.75 per hour in the Portland metropolitan area; $12.50 per hour in nonurban counties; and $13.50 in the remainder of the state. The rates will be adjusted each July to reflect changes in the Consumer Price Index.

Oregon Minimum Wage Counties

Although the law provides three detailed schedules of the minimum wage rates for the next seven years, it provides little guidance to employers looking to determine which of the three rates will apply when they have operations in several geographic areas or where an individual works in several different areas. While the statute provides that the applicable minimum wage rate is determined based on the county where “the employer is located,” it is not unusual for an employer to have locations in multiple counties. And it also is not unusual for employees, such as home health aides or delivery drivers, to perform work in multiple geographic areas.

The Oregon Bureau of Labor and Industries is expected to provide guidance on these and other issues.

Download Epstein Becker Green’s complimentary app, Wage & Hour Guide for Employers, for iPhone, iPad, Android, and BlackBerry devices.