Washington, DC Tip Laws

Under the Fair Labor Standards Act (FLSA), tips are regulated. Employers who meet certain criteria are permitted to take a partial credit against minimum wage obligations for tipped employees. Tipped employees includes those engaged in jobs in which they regularly and customarily receive tips.

The tip credit was created by Congress in 1966, and adjustments occurred on December 28, 2021, when the 2021 Dual Jobs Final Rule went into effect. A federal court vacated portions of the final rule in October 2024, which effectively reinstated the original dual jobs regulation (29 C.F.R.531.56(e). It recognizes that an employee may work in tipped and non-tipped occupations, and employers are only permitted to take the tip credit against minimum wage obligations for hours worked in the tipped occupation.

The FLSA mandates that a tipped worker must be paid at least $2.13 per hour. The FLSA tip credit can be equal to the different between the direct (or cash) wage paid to the employee and the federal minimum wage. Only tips actually received by an employee count when making the determination of a tipped employee and applying the credit.

The FLSA also permits employees to “pool” or share tips with other eligible employees, although it doesn’t impose a limit on the amount or percentage of the contribution of each employee in a valid tip pool.

State law may differ from the federal FLSA standards. Review what tip laws apply in Washington, DC.

When Were the Tip Laws Last Updated in Washington, DC?

The most recent change to tip laws in Washington, DC occurred when voters passed Initiative 82 in 2022.

Does Washington, DC Have Tip Laws That Differ from Federal Tip Laws?

Yes. Initiative 82, which was passed by voters in 2022, effectively phases out the tipped minimum wage over a 4.5-year period. On July 1, 2024, the base wage for tipped workers went up to $10, with the remainder of the minimum wage allowed to be taken as a tip credit. However, the tipped wage will be eliminated altogether on July 1, 2027.

When the changes occur, this article will be updated.

Who Holds the Ownership of Tips in Washington, DC?

Under federal law, any gratuities paid to employees are their property. Employers are not permitted to require employees to hand in their tips, although they are allowed to count the tip toward the hourly rate.

What are the Rules for Distribution of Credit Card Processing Tips in Washington, DC?

Federal law states that all tips paid by credit card must be issued to employees no later than the next regular payday, even if the employer is awaiting reimbursement from the financial provider.

What are the Tip Pooling Rules in Washington, DC?

Employers are allowed to require tipped employees to share earned tips with other staff members who are in the customer chain of service (including providing table service). The policy for sharing tips must be reasonable and tips must be paid in a timely manner.

Who Can and Can’t Participate in Tip Pools in Washington, DC?

Tipped employees may participate if they provide direct table service or are otherwise in the chain of service to the customer. Dishwashers, cashiers, cooks, and managers/owners may not participate in tip pools.

Is there a Difference Between Tips and Service Charges in Washington, DC?

Yes, a mandatory service charge is not considered a tip. Therefore, it would belong to the employer.

To be considered a tip instead of a service charge, a customer must give money voluntarily in an amount of their own choosing. The customer must also be able to determine who receives it, and it can’t be set by employer policy.

Can Employers Deduct Credit Card Fees from Tips in Washington, DC?

Yes, employers in Washington, DC are permitted to deduct credit card processing fees from tips, as long the amount does not exceed what was charged by the credit card company.

Do Tips Count Toward the Minimum Wage in Washington, DC?

Yes, tips count toward the minimum wage in Washington, DC currently. However, the tip credit will be phased out over time.

Do Tips Factor into Regular Rate Calculations for Overtime Pay in Washington, DC?

No, tips do not factor into rate calculations for overtime pay. An employer must pay an employee one-and-a-half times their regular hourly wage for any hours worked beyond 40.

Are There Cities and Municipalities in Washington, DC That Have Their Own Tip and Service Charge Rules That Differ from Statewide Laws?

No, there are no other cities or municipalities within the District of Columbia.

What Are the Record-Keeping Requirements for Employers Regarding Tips in Washington, DC?

Employers must keep detailed records of all tips reported by employees, including amounts and dates of service. If tip pooling is in effect, the record should also include the arrangements and the distribution of tips to eligible staff members.

What Options Do Employees Have for Remuneration if Their Tips are Withheld in Washington, DC?

An employee may take legal action against an employer who violates Washington, DC tip laws.

What are the Penalties for Employers for Not Complying with Washington, DC Tip Laws?

Violating Washington, DC tip laws can subject an employer to administrative and civil penalties of up to $2,500 per instance. Employees may also take legal action to recover back wages.

Managing the regulations associated with tips in Washington, DC can be a challenge. But with WorkforceHub, your business can ensure accuracy. The numerical clock prompt feature allows the employee to input their received tips at the end of the shift, and that information would be available for reporting and payroll processing.

Office of Wage-Hour Compliance Information