D.C. Rings in the New Year with New Requirements for Employers of Tipped (and Non-Tipped) Employees

Seyfarth Synopsis: D.C.’s newest law – the Tipped Wage Workers Fairness Amendment Act of 2018 (the “Act”) – officially took effect on December 13th. The Act, which repeals voter-approved Initiative No. 77 (the Minimum Wage Amendment Act of 2018), faced a last-minute voter referendum challenge after more than 30,000 signatures were collected to pull the legislation from Congressional review and prevent it from taking effect. However, a D.C. Superior Court ruling issued in the late afternoon on December 12th found that a procedural error in the referendum process precluded consideration of the collected signatures and the Act became law the following day.

The primary and immediate impact of the Act is the repeal of Initiative No. 77, which would have substantially increased the minimum wage for tipped workers and eventually eliminated employers’ use of the “tip credit.” But the Act reaches far beyond the simple repeal of Initiative No. 77 through its imposition of new notice, reporting and training requirements on all employers, with heightened requirements for employers utilizing a tip credit in the payment of wages. However, full implementation of the Act requires significant financial investment that cannot be met under D.C.’s current budget and thus the “applicability” of many sections will only be triggered by their inclusion in an approved budget and financial plan. Consequently, although the Act has officially taken effect, employers will not feel the full weight of its expansive requirements until necessary funding is approved. While we keep our eye on the budget process, here’s what employers need to know now and what they can look forward to:

What’s Effective Now

New Notice Requirements for Usage of Tip Credit: Employers who use a tip credit in the payment of wages must provide additional notice to employees that: (1) advises that tips not shared shall be retained by the employee, (2) if tips are shared, sets forth the employer’s tip-sharing policy, and (3) states the percentage by which tips paid via credit card will be reduced by credit card fees. In addition, employers who utilize tip-sharing must post the tip-sharing policy in a conspicuous place accessible to all employees.

Employers must also provide employees with a tip-declaration form each payday and include any tip-sharing policy in the D.C. Wage Theft Amendment Act notifications provided at the time of hire and of any change in the rate of pay.

Quarterly Wage Reports and Required Use of Third-Party Payroll Processor: The Act provides further specificity to the existing requirement to file quarterly wage reports via the DOES online portal and requires that, by January 1, 2020, all employers of tipped employees, except for hotel employers, use a third-party payroll business to process payroll. Expansion of the online portal and inclusion of a reporting mechanism for alleged violations will be rolled out pending budget approval.
Training on Minimum Wage Revision Act of 1992: Every business owner, operator or manager for an employer who uses a tip credit in the payment of wages must undergo annual training on the requirements of the Minimum Wage Revision Act. (However, employers need not submit certifications of completion for these trainings until the Act receives budget approval.) These employers must also annually offer employees the opportunity to attend such a training.

Requirements Still to Come

Notice and Posting Requirements: The Mayor’s office will implement a public education campaign on worker’s rights, create a website that sets forth the rights of all employees under D.C. labor and anti-discrimination laws, and publish an updated poster that must be posted in a conspicuous place, accessible to all employees.

Employers must display the poster in every employee breakroom and at every time clock on the employer’s premises. In addition, employers must print copies of the information posted on the Mayor’s new website, compile it into a single source (e.g., a binder), and make a copy of the complete information packet available at every location that the employee notice poster is posted. Employers must also ensure, on a monthly basis, that these printed materials are updated and identical to the information posted on the website. Unlike other provisions of the Act, these requirements apply to all employers, whether or not they employ tipped employees.

One element of relief for employers is that compliance with the Act’s posting requirements relieves the employer of its obligations to comply with separate posting requirements under ten other D.C. laws. Non-compliance with these posting requirements could result in a $100 fine per day.

Sexual Harassment Training and Reporting Requirements: If an employer has any tipped employees, all of the employer’s employees must take a sexual harassment training course provided by DCOHR, or a DCOHR-approved training provider. All new hires must take the training within the first 90 days of their employment and current employees shall have two years from the applicability date to take the training. Managers, owners and operators of these employers will have to attend the training every two years. If the training is not provided directly by DCOHR, employers must certify the completion of the course to DOCHR within 30 days of the training.

In addition to this training, the Act imposes sexual harassment reporting requirements on employers. Employers must file their sexual harassment reporting policy with DCOHR, distribute the policy to all employees and post the policy. The reporting policy must outline how employees can report harassment both to management and DCOHR. Employers must also document all reported instances of sexual harassment and whether the alleged harasser held a managerial, non-managerial, owner or operator position, and annually report the number of such instances to DCOHR. The stated deadline for most of these actions is July 1, 2019, but the applicability of all of these requirements is subject to the budget approval provision, potentially delaying their implementation.

Seyfarth Shaw will continue to monitor the budget process that will impact the applicability of these additional requirements. Right now, employers should ensure they are in compliance with current requirements and continue to monitor information from the Mayor’s office and DOES regarding implementation of those sections pending budget approval.