How Is Your Restaurant Coping With Initiative 82?
Initiative 82, which will phase out the tipped minimum wage in Washington, D.C.by raising it gradually over the next several years, aims to help restaurant servers and other employees who derive a significant portion of their income from customer tips. The Washington, D.C. area is one of the most expensive places to live in the United States, and the laws of the District require the minimum wage to rise periodically to keep up with inflation. Meanwhile, it has been unpopular with restaurant owners, who account for a substantial share of small business owners in the District. Independently owned restaurants have been dealt a bad hand in the past few years, with one hardship following another. First it was the restrictions on in-person dining, and then it was the skyrocketing cost of food ingredients. Initiative 82 could be the last straw for many restaurants, but the D.C. Council is considering two bills that aim to ease the burden on restaurants while enabling restaurant workers to benefit from higher wages. A Washington D.C. small business lawyer can help you find the best way to pay off your business debts in the age of Initiative 82.
D.C. Councilmembers Introduce Bills to Help Restaurants Regain Their Footing After the Pandemic
Many restaurant owners in the District of Columbia have resorted to desperate measures to prepare for Initiative 82, which took effect at the beginning of May. Some have eliminated table service, while others have moved their restaurants across the border into Virginia or Maryland. One of the most popular solutions with restaurant owners, however, has been adding service charges to customers’ bills. As you can probably guess, this solution has not been very popular with customers, but some restaurant owners feel that adding service charges is their only option if they want to avoid defaulting on the debts that their businesses racked up during the pandemic.
The D.C. Council is currently considering two bills, one by Kenyan McDuffie and the other by Charles Allen, that aim to protect both the higher wages of restaurant workers and the viability of small restaurants. The new bills would allow restaurants not to count the money they received through service charges as taxable income. The bills are, for all practical purposes, a tax break for restaurants. The goal is that, by keeping all of the money received through service charges instead of paying a portion of it in taxes, restaurant owners will more easily be able to afford to pay servers and other tipped employees the higher wage while also paying down the debts that many restaurants accumulated during the pandemic.
The “everything is expensive” problem does not appear to be going away anytime soon. A business law attorney can help you develop a short-term and long-term plan for the financial wellbeing of your restaurant.
Contact Tobin O’Connor & Ewing About Coping With Business Debts
A Washington, D.C. small business attorney can help your restaurant regain its footing after the pandemic. Contact Tobin, O’Connor & Ewing today.