Jeff Ruzal Quoted in “DC Service Fees a Case Study for Tip Wage Phaseout”

Restaurant service fees have emerged as an early byproduct of a move by Washington, D.C., to phase out businesses’ ability to legally pay subminimum wages to workers who earn tips, prompting the city’s attorney general to issue guidance to help operators comply with consumer protection law. …
Over a five-year period, the tipped minimum wage will increase until it matches the general minimum wage in 2027, thanks to Initiative 82, a ballot measure voters approved in November by a nearly 3-1 margin.

Before the initiative, known as the District of Columbia Tip Credit Elimination Act of 2022, passed, restaurants could pay tipped workers $5.35 per hour, although the wage floor for others was $16.10. The tipped minimum wage has already risen to $8 and is set to increase by $2 an hour in each of the next three years before it syncs up with the standard wage floor in four years. …

Jeff Ruzal, a member of Epstein Becker Green who also counsels New York hospitality employers, told Law360 a key distinction between the wage order and D.C.’s consumer protection law is who it’s intended to protect.

“When you’re talking about who’s going to be the plaintiff in a lawsuit or a complaint or an agency charge from the AG, is it going to be an employee or is it going to be a consumer?” he asked.

The fee guidance comes in response to how restaurants are implementing Initiative 82 and seems like it’s designed to benefit employees as well as customers, Ruzal said. But relying on a law that’s intended to crack down on deceptive fees seems like a roundabout way to help put money in workers’ pockets, he said.

“It doesn’t seem to me as clear as the state of New York,” he said. “If it’s presumed to be a gratuity and it’s not shared with the employee, then the employee is the aggrieved party.”