On November 8, 2022, voters in Washington, D.C., overwhelmingly passed Initiative 82, the “District of Columbia Tip Credit Elimination Act of 2021,” which will phase out the tipped mandatory base wage by 2027. Notably, a very similar initiative was passed in 2018 by the Council of the District of Columbia but was ultimately repealed.

Current Law

Initiative 82 states that under current law, employers of employees classified as “tipped workers” may take a credit against tipped wages received by workers to satisfy the minimum wage guaranteed to all workers by law. Currently, the mandatory base wage for tipped workers in Washington, D.C., is $5.35 per hour.

Initiative 82

Initiative 82 gradually eliminates the tipped wage credit so that the mandatory base wage paid by employers increases until 2027. In 2027 the mandatory base wage will match the minimum wage, currently $16.10, established by the District of Columbia, currently.

As of January 1, 2023, the proposed schedule will be implemented:

DateMinimum Cash WageMaximum Tip Credit
January 1, 2023$6.00$10.10
July 1, 2023$8.00$8.10
July 1, 2024$10.00$6.10
July 1, 2025$12.00$4.10
July 1, 2026$14.00$2.10
July 1, 2027$16.10$0

Next Steps

Initiative 82 still must be sent to Congress for a 30-day review. After this review period, Washington, D.C., employers should contact experienced counsel with questions regarding the requirements of Initiative 82.

In October 2022, the Supreme Court of Virginia ruled that an individual cannot face personal liability as an “employer” under the Virginia Wage Payment Act (VWPA). The decision both clarifies Virginia law and serves as an important reminder for employers (and their managers and supervisors) that many states can impose personal liability on individuals for wage-and-hour claims.

Continue Reading Personal Liability for Wage Claims? Virginia Says ‘No,’ but Other States Say ‘Yes’

Each year, the California Department of Industrial Relations (DIR) updates the minimum pay requirements for certain exempt professions. This October, the DIR updated the 2023 rates for computer software employees and licensed physicians and surgeons. The new rates will go into effect on January 1, 2023, and reflect the 7.6% increase in the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. For workers who meet the requirements for a computer software employees exemption, the DIR increased the computer software employees’ rates as follows:

  • Minimum hourly rate of pay exemption from $50.00 to $53.80.
  • Minimum monthly salary exemption from $8,679.16 to $9,338.78.
  • Minimum annual salary exemption from $104,149.81 to $112,065.20.

For workers who meet the requirements for a licensed physicians and surgeons exemption, the DIR has increased the minimum hourly rate of pay exemption from $91.07 to $97.99.

Employers with questions should contact experienced counsel.

On October 13, 2022, the U.S. Department of Labor (DOL) published a Notice of Proposed Rulemaking (the Proposed Rule) that provides guidance on determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA). Proper classifications are significant because independent contractors are not afforded wage-and-hour protections under the FLSA and/or applicable state law, such as minimum wage for all hours worked or overtime compensation for over 40 hours worked in one workweek. Misclassification can subject companies and organizations to class and collective actions and expose them to significant liability.

Continue Reading US Department of Labor Proposes Independent Contractor Rule

Governor Gavin Newsom signed California’s Senate Bill 1162, a pay transparency law aimed at identifying pay disparities based on gender, ethnicity, and race, on September 27, 2022. The bill expands employers’ obligations to report pay data and requires certain employers to disclose salary ranges for employees and positions available to applicants.

Continue Reading California Governor Signs New Pay Data and Salary Disclosure Bill

On September 5, 2022, California Governor Gavin Newsom signed the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act or A.B. 257). The FAST Recovery Act creates the Fast Food Council, responsible for establishing minimum standards for employees in the fast-food industry, including establishing minimum wages, working hours, and other working conditions related to health and safety in the fast-food industry. The FAST Recovery Act will take effect on January 1, 2023, and will become inoperative on January 1, 2029.

Continue Reading California’s FAST Recovery Act Establishes a Council With Broad Authority to Set Standards for Fast Food Workers

Employers with Michigan employees should remain vigilant to the likelihood of profound changes to the state’s wage-and-hour laws, including a new sick leave obligation, an increase in the minimum wage to $12.00 an hour, and a phase-out of the tipped employee wage classification. Pending the outcome of current litigation, these changes could take effect as soon as February 21, 2023.

On July 19, 2022, the Michigan Court of Claims[1] in Mothering Justice v. Nessel held that the state legislature’s amendment of two 2018 ballot initiatives was unconstitutional. The initiatives are the Improved Workforce Opportunity Wage Act (IWOWA) (the minimum wage law) and the Paid Medical Leave Act (PMLA), formerly the Earned Sick Time Act. Mothering Justice is currently stayed until February 20, 2023. On August 5, 2022, the Michigan attorney general filed a joint motion for expedited appeal. The Michigan Court of Appeals—and perhaps the state Supreme Court—will decide whether the IWOWA and the PMLA must be enacted as originally submitted to the legislature or as the legislature later amended them.

Continue Reading Michigan Wage and Hour Laws on the Move?

Determining an employee’s overtime rate of pay can be tricky. The U.S. Department of Labor (DOL) recently found an employer owed over $1 million in back wages to employees in California and Kentucky for violations that included miscomputation of overtime pay rates. The employer failed to account for certain bonuses earned by nonexempt workers, and therefore paid overtime rates that were too low.

Continue Reading Giving a Nondiscretionary Bonus? Check the Regular Rate Calculation

What Is COVID-19 Hazard Pay?

The COVID-19 pandemic motivated many employers to provide extra wages, often referred to as “hazard pay,” to employees who continued to work throughout the pandemic, despite the threats created by the virus, particularly pre-vaccine. Hazard pay is provided both to incentivize employees to work in potentially hazardous conditions and to compensate those individuals for the additional risks they assume.

Continue Reading COVID-19 Hazard Pay and Overtime Violations

Legal, political, and social movements have pushed pay equity to the top of many organizations’ priorities. Activist shareholder proposals, changes in state laws, Biden administration efforts, and calls from employees regarding greater transparency have spurred employers to find out where they stand. In this episode of Workplace Rules, Senior Counsel Chris Wilkinson, who previously served as associate solicitor for civil rights and labor management at the U.S. Department of Labor (DOL), is joined by Cary Elliott, director at Resolution Economics, and Tammy Dowley-Blackman, CEO of Tammy Dowley-Backman Group, LLC to discuss the latest on pay equity topics.

Listen to “Today’s Pay Equity Landscape” on Spreaker.