Referendum on Law Repealing Initiative 77 – Minimum Wage Amendment Act of 2018

BOARD OF ELECTIONS NOTICE OF PUBLICATION

The Board of Elections, at a Special Meeting held on Friday, November 9, 2018, formulated the short title, summary statement, and legislative text of the “Referendum on Law Repealing Initiative 77 – Minimum Wage Amendment Act of 2018.” Pursuant to D.C. Code § 1-1001.16 (2016 Repl.), the Board hereby publishes the aforementioned formulations as follows:

REFERENDUM MEASURE

NO. 008

SHORT TITLE

Referendum on Law Repealing Initiative 77 – Minimum Wage Amendment Act of 2018

SUMMARY STATEMENT

Under current law, employers may pay tipped employees lower base hourly wages if the total received in wages and tips equals or exceeds the minimum wage for non-tipped workers. Initiative 77, approved by voters in June 2018, would incrementally increase the base wage for tipped employees by 2026 to the same amount guaranteed non-tipped employees. In October 2018, the District of Columbia Council voted to repeal Initiative 77 and maintain current law. If approved, Referendum 008 would reject the Council’s repeal. Vote FOR Referendum 008 to reinstate Initiative 77. Vote AGAINST Referendum 008 to allow the Council’s repeal to become law.

TEXT OF MEASURE

Shall the registered voters of the District of Columbia approve or reject section 2 of D.C. Act 22-489?

D.C. Act 22-489 — “Tipped Wage Workers Fairness Amendment Act of 2018”

“Sec. 2. The Initiative No. 77 – – Minimum Wage Amendment Act of 2018, effective October 11, 2018 (D.C. Law 22-163; 65 DCR 8513), is repealed.”

 

F.A.Q.

Frequently Asked Questions

Who is leading the Referendum effort?
The Save Our Vote campaign committee is leading the referendum effort, with support from the tipped workers, community members, community organizations, and clergy who are infuriated at the DC Council’s decision to overturn Ballot Initiative #77.

Why did the DC Council overturn Ballot Initiative #77?
On June 18, 2018 Ballot Initiative #77 was passed by DC residents who voted in favor of giving tipped workers a fair base wage. The restaurant industry that funded DC councilmembers’ campaigns lobbied the legislators and as a result, the DC City Council voted to overturn the Initiative on October 16. Fortunately, the majority of DC voters believe that democracy is not for sale, that people’s votes matter and that they spoke clearly when they approved Ballot Initiative #77 to raise wages of workers in some of the lowest paid occupations. Therefore, the Save our Votes campaign was formed.

Do tipped workers oppose Ballot Initiative #77?
No. The majority of tipped workers – bussers, food runners, delivery drivers, valet drivers, nail salon workers, baggage handlers want a raise. Restaurant Opportunities Centers United has been working with tipped workers and high road employers across the country for years, leading the way to higher wages and better working conditions in the restaurant industry. Spreading fear and misinformation among higher paid tipped workers, the restaurant lobby has recently been mobilizing them against higher wages using the false narrative that higher wages means no tips and/or job loss.

However, those claims are misleading and the data and the real-world experiences tell a different story. The tipped wage in DC has increased without a decline in tips. There are currently 7 states with One Fair Wage for all workers, that have thriving restaurant industries with higher per capita sales revenues, higher restaurant job growth and equal or higher tipping rates than the states with a subminimum tipped wage. Tipping is part of the American culture and will not go away with a minimum wage increase.

Who is a tipped worker?
Anyone who receives more than $30 in tips per month can be considered a tipped worker by their employer, which allows the worker to be paid a sub-minimum wage.  We have recently seen greedy owners recategorized their workers as tipped workers in order to pay them less. Ballot Initiative #77 will gradually eliminate the sub-minimum wage to prevent this from happening.

Nearly 70% of tipped restaurant workers are women. The sub-minimum wage for tipped workers is in effect legislated pay inequity for a predominately female workforce. This inequity is exacerbated when accounting for race and intersectional identities.

Tipped workers with a sub-minimum wage are twice as likely to live in poverty and rely on food stamps as the rest of the workforce. The restaurant industry is one of the largest growing industries in the nation, and the largest employer of minimum wage workers (1 in 12 Americans). Putting more money into the pockets of the growing number of low-income tipped workers, who will spend their additional earnings at local businesses, boosts the consumer spending that drives our nation’s economy.

What is the Tipped Minimum Wage?
Under existing law, employers are allowed to pay tipped workers a lower hourly minimum wage. Currently, the minimum wage for tipped workers in DC is $3.89 per hour. If the worker does not collect enough tips to equal DC’s prevailing minimum wage of $13.25 per hour, the employer must pay the employee the difference. That difference of $9.35 is what we call the “Tip Penalty.” The restaurant lobby refers to it as a “Tip Credit” because it is to the employer’s benefit – in that it allows them to pay their workers less. While the law requires employers to ensure everybody earns at least the full minimum wage, the Department of Labor data show that non-compliance is rampant—more than 80 percent. This complex system requires extensive tracking and accounting of tip flows, leaving tipped workers vulnerable to abuse and inaccuracy and increasing business risks and liabilities, which is another reason why One Fair Wage for all workers is the best enforcement mechanism.

For example, on a slow night a server collects only $25 in tips for 5 hours of work. Their pay for that evening would be $3.89 X 5 hours + $25 in tips = $44.45, or $8.89 per hour. With the Tipped Credit, the employer would be required to chip in an additional $4.36 per hour to the tipped employee so they end up making $66.25, which is $13.25 per hour for 5 hours. If the Tipped Credit didn’t exist, that same worker would make $13.25 per hour in wages plus $25 in tips, so if they worked 5 hours and received $25 in tips, they’d make $91.25 instead of $66.25.  The Tipped Credit allows employers to pay their worker less!

What is wrong with the Tipped Credit?
The unethical two-tiered minimum wage system, which allows business owners to outsource employee wages to the whims of customers, creates and perpetuates pay inequity, economic disenfranchisement, sexual harassment and other abuses of power. Worse, tipped employees pay less into Social Security, Medicaid, and State & Federal taxes because most employers tax their low wages not their declared tips.

The restaurant industry is the single largest source of sexual harassment claims in the U.S. because tipped workers are dependent on the generosity of customers for their income, rather than their employers. As a result, they must often tolerate inappropriate behavior from customers, and are vulnerable to sexual harassment from coworkers and managers. While 7% of American women work in the restaurant industry, it is responsible for 14% of all sexual harassment claims to the Equal Employment Opportunity Commission.

Does Ballot Initiative #77 eliminate tipping?
NO! There is nothing in Ballot Initiative #77 about eliminating tips. Tipping is an American custom that still exists in the States that have eliminated the sub-minimum wage.  Rather, restaurant owners told their employees that they’d remove the tip line on receipts and force customers to pay a service charge. A service charge is not a tip and it’s the property of the establishment. Therefore the notion of “Save Our Tips” is predicated on greedy restaurant owners preventing customers from tipping, not Ballot Initiative #77. Rather, Ballot Initiative #77 provides tipped workers with a higher base pay ($15 an hour by 2026) plus tips on top.

One Fair Wage Facts:

    • 7 states currently have “One Fair Wage,” meaning they do not have a tip credit or a sub-minimum wage. They also have thriving restaurant industries where customers continue to tip.  The 7 states include: California, Oregon, Alaska, Washington, Montana, Minnesota & Nevada
    • The federal tipped minimum wage is $2.13 and has been at this rate since 1991
    • The tipped minimum wage in DC is currently $3.89
    • The full minimum wage in DC is currently $13.25

BACKGROUND DETAILS ON THE ISSUE
Ballot Initiative #77, proposed by Restaurant Opportunities Center-DC (ROC-DC), sought to eliminate the sub-minimum wag by slowly increase the minimum wage for tipped workers to $15/hr by 2025.  An increase in the tipped wage would ensure that wages are coming directly from the employer and not subsidized by customer tips/gratuities.  Although employers are required to make sure tipped workers receive the full min wage when tips don’t make up the difference, tipped workers are extremely vulnerable to wage theft, in addition to poor enforcement of the District’s current wage laws.

• On June 19, 2018, DC voters approved Ballot Initiative #77 by 56%, a wide margin of 11.5 percentage points.

• On October 16, 2018, under the pressure of restaurant industry lobbyists, 8 DC Councilmembers voted on to repeal Ballot Initiative #77. The eight DC Councilmembers who voted to repeal Ballot Initiative #77 were:

Chairman Phil Mendelson
At-Large Councilmember Anita Bonds
At-Large Councilmember David Grosso
Ward 2 Councilmember Jack Evans
Ward 4 Councilmember Brandon Todd
Ward 5 Councilmember Kenyan McDuffie
Ward 7 Councilmember Vincent Gray
Ward 8 Councilmember Trayon White Sr.

• On October 30th, a Referendum Campaign Committee called “Save Our Vote No DC Council Repeal of Initiative 77” was formed to give DC voters the final say.

• On November 27, the Campaign will receive the Circulating Petitions from the DC Board of Elections

Overview of Referendum Process:
• Referendums can be introduced by voters to overturn nearly any law passed by the DC Council
• The Referendum Process starts when the Council Chairman transmits a DC Law to Congress for the 30 legislative day review (also known as the Congressional Review Period).
• The District’s “Home Rule Charter” requires all laws passed by the 13-member DC Council be reviewed by Congress before becoming law. (A legislative day is any day when either the House of Representatives or Senate is in session)
• The campaign must collect valid signatures from 5% of the registered voters in 5 of the 8 Wards of the District (roughly 25,000 signatures)
Once the Referendum Petition is submitted and has been certified, the Board of Elections must schedule a special election within 114 days
• In the special election, DC Voters will be asked to vote “YES” if they approve of the Referendum & Repeal of DC Council’s Repeal law or “NO” if they reject the referendum and support DC Council’s repeal of Initiative 77
• If DC voters choose YES and repeal DC Council’s law, the DC Council may not legislate on the issue for 365 days