Montgomery County Councilmembers will introduce a bill Tuesday that would change the way tipped workers are compensated.
The proposal from Councilmembers Will Jawando and Kristin Mink adjusts the calculation of the minimum wage for tipped workers by phasing out the tip credit amount under the current county minimum way.
It would not go into effect fully until July 1, 2028.
Currently, an employer calculates the minimum wage by including a tip credit, which represents the amount of the minimum wage a worker is expected to get in tips. That credit is the hourly minimum wage minus $4 or less.
The bill proposes to phase out the tax credit. As of July 1, 2024, it would be $6 an hour that could be credited. It would jump to $8 an hour on July 1, 2025, $10 an hour on July 1, 2026 and $12 an hour on July 1, 2027.
“We believe that now is the right time to take up this issue in Montgomery County before significant disparities are created between workers and restaurants in our region,” Jawando and Mink wrote in a joint letter. “The subminimum wage is an outdated practice that leads to pay inequity,” they wrote.
The Employment Policies Institute (EPI) in Arlington, Va., opposes this bill.
“Employees, economists, and restaurants oppose tip credit elimination because it harms everyone affected. In neighboring Washington, D.C., diners and employees are frustrated by the aftermath: higher menu prices, more service charges, and lower tips for employees,” said Director of Research Rebekah Paxton in a statement.
“Earlier this year, Maryland Senators listened to employees and abandoned this misguided policy. Montgomery County lawmakers should do the same,” she wrote.
According to EPI, every $1 increase in the tipped minimum wage causes 6.1% job loss for tipped restaurant employees. The organization predicted that thousands of workers here could lose their jobs.
