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D.C. restaurants are changing how they handle wages for workers who get tips

ARI SHAPIRO, HOST:

Several states are weighing whether to end the long-standing practice of paying workers less than the minimum wage if they earn a certain amount in tips. Washington, D.C., is one of the first cities in decades to start phasing out the tipped minimum wage. WAMU food reporter Amanda Michelle Gomez looked into how that's affected the city's restaurant scene.

AMANDA MICHELLE GOMEZ, BYLINE: Restaurant bills in D.C. look a lot different these days. Just ask food influencer Cornelia Poku.

CORNELIA POKU: I'm seeing a lot of fees and they're inconsistent from place to place.

GOMEZ: Many restaurants have started charging anywhere from 3% to 22% more at the end of a meal. Food writer Nevin Martell says patrons are perplexed.

NEVIN MARTELL: There's not enough transparency sometimes on behalf of restaurants, you know, the advertising of what a service charge might be, a clear explanation of how that service charge is being used, or just a customer that misses it or doesn't think to ask. I think mostly what I see, unfortunately, is people confused, which leads to them getting upset.

GOMEZ: The restaurant industry has long relied on tips to pay servers and bartenders. But in 2022, D.C. residents voted for something called Initiative 82. It phases out the sub-minimum wage in the hopes that restaurant workers receive steady, higher pay. In three years, restaurants will have to pay the city's full minimum wage. Restaurants are already required to increase base wages from roughly $5 to $8 per hour.

GEOFF TRACY: The annual increase in expense for each of my restaurants is somewhere between $330,000 to $400,000.

GOMEZ: That's longtime restaurant owner Geoff Tracy. He charges a 5% fee. It's called a, quote, "Initiative 82 fee" on the menus at his two D.C. restaurants. He didn't want to raise menu prices because he didn't want to scare off customers.

TRACY: And I don't want the guest to, you know, make the decision to say, well, I can't afford to go out two times a week - I'm only going to go out one time a week. I think that's bad for the full-service restaurant industry.

GOMEZ: Some D.C. restaurant workers have seen a dip in their tips and total earnings because of fees. But according to popular point-of-sale system Square, the total earnings for restaurant workers on the whole has increased in the year since the change. Bartender Zach Slavin says he's benefited.

ZACH SLAVIN: An extra $2 an hour results in an extra, you know, hundred or so dollars a month that I can spend on groceries. Then I can more easily pay my rent, then I can pay bills, and then I can even occasionally go visit the kind of restaurants that I work in.

GOMEZ: Slavin's bar charges a fee, but he says it goes to workers. The bar started charging the fee during the pandemic when not enough people were coming in.

SLAVIN: I support the use of fees when they go directly to workers as tips. Outside of that, I think that restaurants should simply raise their menu prices to cover their costs like any other business does.

GOMEZ: Some businesses with fees have been hit with bad reviews, social media shaming and even lawsuits. The food influencer Cornelia Poku isn't sure how much to tip if there is a fee.

POKU: It's just confusing when I, as a diner, sit down and I'm trying to figure out what is my contribution at the end towards the staff. I love to eat, I go out to eat a lot, and I still have to be mindful of my budget and my own spending.

GOMEZ: While many Washingtonians believe tip workers should be paid a livable wage, not everyone agrees on how restaurants are paying for it. For NPR News, I'm Amanda Michelle Gomez in Washington.

(SOUNDBITE OF LADY WRAY SONG, "GET READY") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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