Councilmember Will Jawando introduced a bill Tuesday morning that would change the way tipped workers are compensated.
Under his proposal, by 2028 the tip credit would be phased out, and employers would have to pay workers the legal minimum wage without including their tips.
It would not go into effect fully until July 1, 2028.
Representatives from One Fair Wage, CASA, Our Revolution, SEIU Local 1199 and National Women’s Law Center joined Jawando in front of the council office in Rockville to call for passage of the bill. A public hearing is set for Oct. 10.
“No one should have to go hungry or miss rent because they had a bad night in tips. It’s unconscionable,” Jawando said. “Today we are saying loud and clear to our tipped workers, you will no longer be left behind.”
Councilmember Kristin Mink is the lone cosponsor.
Currently, an employer calculates a worker’s minimum wage by including a tip credit, which represents the amount of the minimum wage a worker is expected to get in tips. That credit is the hourly minimum wage minus $4 or less.
If a worker receives smaller tips than usual, the result is subminimal pay, Jawando said. “Subminimal wage is rooted in racial injustice,” affecting women and people of color the hardest, he noted.
The bill proposes to phase out the tax credit. As of July 1, 2024, it would be $6 an hour that could be credited. It would jump to $8 an hour on July 1, 2025, $10 an hour on July 1, 2026 and $12 an hour on July 1, 2027.
According to several of the speakers, eliminating the tip credit would be a win for employees, who will earn more, and a win for restaurant owners, who won’t have so much trouble hiring staff.
The Employment Policies Institute (EPI) in Arlington, Va., disagreed.
Tip credit elimination “harms everyone affected. In neighboring Washington, D.C., diners and employees are frustrated by the aftermath: higher menu prices, more service charges, and lower tips for employees,” said Director of Research Rebekah Paxton.
During the press conference, Councilmember Jawando was joined by several local advocates in support of Bill 35-23, County Minimum Wage – Tipped Employees. pic.twitter.com/fNwRnD7MU6
— Montgomery Council (@MoCoCouncilMD) September 19, 2023
