WASHINGTON — D.C. voters overwhelmingly passed Initiative 82 raising the minimum wages of tipped workers. But as restaurant surcharges rise across the District, complaints to the Attorney General’s office are skyrocketing, too.
In the six months before Initiative 82 passed, the DC Attorney General’s Office told WUSA9 it received three complaints about restaurant charges. In the six months after it passed, 152 complaints were filed.
Now restaurant owners tell WUSA9 that your bill is about to go up even more.
“I think every restaurant in D.C. will have a 20% service charge,” said Geoff Tracy, owner of Chef Geoff’s which has two D.C. locations. Geoff was referring to how restaurant owners will have to respond when the District meets the ultimate requirement of Initiative 82, which is for all tipped restaurant industry workers to make $18 an hour by 2027.
Currently the tipped minimum wage is roughly $8 an hour.
For now, Tracy is tacking on a 5% I82 fee in his restaurants to help him cover the cost of the wage increase. But he also expects his guests will deduct that charge from the tip. He said owners can’t just take those wage hikes out of the bottom line, like many are now suggesting.
“There is no money on the bottom line,” Tracy said. “I mean, if you go from $5 an hour to $15 an hour to $18 an hour, that’s a $400,000 increase for this restaurant alone. One restaurant. So that money is not there on the bottom line.”
“We don't make $400,000 on this thing,” Tracy continued. “So I would have to, I would have to enormously increase the menu costs. And I just didn't think that was the right thing to do.”
There’s concern among servers that surcharges will cause customers to cut back on how much they tip. So, in the end, they don’t end up getting the pay raise voters intended.
On a recent visit to Brasserie Liberte in Georgetown, WUSA9 was hit with a 20% service fee. The menu states the fee “goes to a higher hourly rate for the people that take care of our guests.” But when WUSA9 asked the waiter if that 20% charge acted as our tip, he said, "no."
In an email, owner Hakan Ilhan confirmed the service fee “is not a tip.” Noting the credit card receipt has an “additional tip” line which gives the “option” to customers to add a tip.
“I can assure you that with tip credit gone, we are faced with two options,” Ilhan wrote in an email. "Either raise the prices or implement a service charge. Raising the prices is not a good option, our customers do not have that extra change in their pockets to pay more, no one will pay $30.00 for a burger, for example.”
“At least service charge gives an option (not an ideal one) to our customers, not to leave any additional tip if they choose not to, language gives them the cover. This way they do not get to pay more than before the initiative.”
But tipped workers who supported I82, like Max Hawla and Zoe Dorau, say all the surcharges are nonsense.
“I mean in no way the policy even dictates or suggests a service charge,” Hawla said.
A new study from a think tank partial to the restaurant industry, the Employment Policies Institute, reports 70% of restaurants surveyed in D.C. now say they have or will add an automatic surcharge to the bill.
“It’s not what they voted for,” Dorau said of D.C. voters. “And certainly, tipped workers are seeing less tips in their pockets. Because those service charges are not always going to them.”
Hawla and Dorau are incensed at a bill Councilmember Kenyan McDuffie just introduced. It would rip the Band-Aid on I82. Holding wages where they are for now. Then go straight to the full $18 minimum wage in the summer of 2025.
The plan is so controversial 90 people signed up to speak at a recent public hearing which took two days to complete. Server after server called the plan a poison pill to give the restaurant industry time to drum up public opposition to I82, and repeal it all together.
“He’s covertly trying to sabotage Initiative 82,” Hawla said.
But McDuffie called it a compromise with the restaurant industry which argues if the District wants to do this, the city needs to go all the way because restaurant’s can’t be resetting budgets every year for the next four years as wages go up incrementally.
Whatever the timeline, restaurant owners in D.C. say service charges are here to stay.
“I believe at the end of the day people will dine out a lot less, and many restaurants will not make it, the ones that will survive will only do so, because of the supply and demand ratio change with many closings,” Ilhan wrote in his email to WUSA9. “This is coming, you will see a lot more closings this winter.”
“Our customers will cut back in dining out.”
So, what should you do as a customer to understand what you’re paying for, and whether it counts as a tip or not? If it’s not clear on the menu, ask the manager, not the server. It takes less pressure off the server who might think you’re mad at them, and not the policy.