The D.C. Council voted Tuesday to limit service fees at bars and restaurants to 20 percent, the latest salvo in a long-running battle over Initiative 82, a law meant to gradually raise the minimum wage for the city’s tipped workers.
The sweeping “Restaurant Revitalization” bill lumps together several measures meant to support D.C.’s restaurant industry, including regulations on food delivery apps and an attempt to lower the cost of liquor liability insurance. But the council spent the most time debating amendments related to service charges and I-82, which have caused months of mounting agita among diners. I-82 requires restaurants to raise a tipped worker’s minimum wage each year until it becomes the same as the regular minimum wage in 2027.
Since implementation of I-82 began last spring, restaurant customers have expressed frustration over being surprised by fees they don’t understand and confusion about whether to adjust their tips. Meanwhile, the issue has caused division within the industry: Some worry about the future of their incomes and restaurants, while others believe making $17 per hour — D.C.’s nontipped minimum wage — will protect workers and support a stronger dining scene.
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The passage of the amendment regulating service fees suggests that D.C. leaders are facing increasing pressure to create more clarity for customers.
“I think the discussion of service fees from the dais reflects how concerned council members are about how fees are rolling out in D.C. right now,” said Elizabeth Falcon, executive director of the labor rights organization DC Jobs With Justice, part of the Fair Price Fair Wage coalition that supports I-82. “Honestly, I think that the chaotic nature of the discussion today reflects the need for some kind of comprehensive legislation, rather than something that’s just done through an amendment.”
Shawn Townsend, president of the Restaurant Association Metropolitan Washington, said the new bill’s passage “promises substantial benefits for our neighborhood restaurants, including operators, workers and diners alike.”
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The bill, which passed 12-1, will now head to Democratic Mayor Muriel E. Bowser’s desk for consideration within 10 days. If signed, it will undergo congressional review before becoming law.
Here are some of the major changes that will occur if the bill takes effect:
Service fees would be capped at 20 percent
This amendment, which passed 7-6, would allow bars and restaurants to impose a service fee of up to 20 percent if that charge is prominently disclosed to consumers. That language would have to describe how the fee will be distributed, including what portion, if any, goes to employees.
The amendment would also act as a “safe harbor” protecting rule-abiding businesses from lawsuits like those recently filed against Clyde’s Restaurant Group and Knead Hospitality and Design by the consumer protection nonprofit Travelers United. The nonprofit argued that those restaurant groups’ service fees were “deceptive,” and both groups dropped the surcharges in response.
The timeline for implementing I-82 remains the same
The council voted down an amendment that would have compressed the timeline for raising the tipped minimum wage. This measure would have effectively ripped off the Band-Aid for restaurants and bars by requiring them to pay workers the full nontipped minimum wage starting in 2025 — an effort to get money into employees’ hands faster. But the amendment also would have rapidly raised labor costs for restaurants and rolled back the timeline voters approved in a 2022 referendum.
Liquor liability insurance would probably become cheaper
The bill would address the cost of liquor liability insurance, which is significantly higher in D.C. than in Maryland or Virginia. Language in the bill clarifies D.C.’s prohibition on over-serving customers, creating a clearer legal framework meant to eventually lower insurance premiums for bars and restaurants. The goal is to free up more income for business owners and promote stability in an expensive industry.
Food delivery apps couldn’t penalize restaurants for different service levels
The bill would ban food delivery services, such as Grubhub and DoorDash, from decreasing a restaurant’s delivery radius below a certain threshold based on what level of service the establishment pays them for. It would also prohibit the delivery services from reducing the number of drivers available to transport orders from a restaurant.
Fritz Hahn and Meagan Flynn contributed to this report.
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