Earlier this summer, the Washington, D.C. Council (“Council”) narrowly passed an amendment to the Fiscal Year 2026 Budget (the “Amendment”) partially repealing portions of Initiative 82 and restructuring how tipped workers’ wages will rise over the coming years.
If enacted, the Amendment would also impose new pay transparency requirements for all D.C. employers, not just those with tipped workers, and will require periodic studies of the District’s restaurant industry and tipped worker pay.
Tipped Minimum Wage
As we previously reported here, Initiative 82 is a ballot measure approved in November 2022 that would have gradually increased the tipped minimum wage until it was eliminated entirely by July 2027. However, D.C.’s restaurants have complained that eliminating the tipped minimum wage places an untenable financial strain on an industry already struggling with rising costs and changing customer habits. In previous responses to those concerns, the Council postponed several scheduled increases to the tipped minimum wage, including a recent emergency measure that delayed the July 1, 2025 bump from $10.00 to $12.00 per hour until October 1, 2025.
The Amendment extends the current $10.00 per hour tipped minimum wage through July 1, 2026, after which the tipped minimum wage will be a set as a percentage of the regular minimum wage. The tipped minimum wage will start at 56% of the regular minimum wage on July 1, 2026, and increase to 60% on July 1, 2028. Subsequently, the tipped minimum wage percentage will increase by 5% every two years until it reaches 75% on July 1, 2034, as illustrated below.
Employers should note that while the tipped minimum wage percentage will remain frozen for two years, the new schedule still increases the tipped minimum hourly wage rate annually, because the regular minimum wage rate is tied to inflation.
Pay Transparency and Other Provisions
The amendment will require all employers, not just those with tipped employees, to provide additional information on employee pay stubs. Beginning January 1, 2026, employers must include all the sources of an employee’s compensation on their pay stubs, including bonuses, commissions on sales, service charges, as well as any other sources.
The amendment also directs D.C.’s Chief Financial Officer to periodically study and publish reports on the effect of recent changes to federal and D.C. law on tipped restaurant workers’ pay and the health of the restaurant industry overall.
Implications for D.C. Employers
The Amendment represents a compromise between Mayor Murial Bowser’s original proposal in this year’s budget, which would have repealed Initiative 82 entirely, and workers who wish to eliminate the tipped minimum wage. The dramatic vote in July showed that the tipped minimum wage rate remains a highly contested issue that D.C. employers should continue to monitor.
Additionally, while the Amendment is a significant milestone, the final 2026 Fiscal Year Budget has several steps before it is enacted. The budget must first be approved by the whole Council and forwarded to Mayor Bowser. If the Mayor signs the bill, the local portion of the budget (which includes the Amendment) must then pass the mandatory Congressional review period. Nevertheless, restaurants should begin preparing by reviewing their pay rates for tipped employees and working with their payroll providers to ensure each D.C. employee’s pay stub lists the relevant sources of their compensation by start of 2026.
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