A new report from two labor groups says that many bars and restaurants in D.C. are failing to report required data on how much tipped workers are being paid, but an association representing the hospitality industry says that any such failures are actually the fault of the D.C. government.

The dispute dates back four years and involves the tipped minimum wage, the fate of which will be decided (again) by voters during the Nov. 8 election.

When the D.C. Council overturned Initiative 77, the 2018 ballot measure that would have phased out tipped minimum wage, lawmakers passed compromise legislation intended to assuage concerns that the system enabled wage theft. Among other things, the law required employers of tipped workers and payroll companies to report certain wage data that would help identify whether workers were in fact being paid at least the minimum wage.

That wage reporting does not seem to be happening, but the reason why is a matter of debate.

A report released Wednesday appears to show widespread noncompliance with the 2018 law. The report says most D.C. bars and restaurants with liquor licenses have not reported wage data to the city in recent years. But the Restaurant Association of Metropolitan Washington is pushing back against those accusations, citing the government’s botched implementation of the 2018 law. Beginning Jan. 2020, employers of tipped workers were required by law to use a payroll business, and third-party companies were supposed to submit the wage data through a new portal — but that never happened, as DCist/WAMU previously reported.

The report comes as D.C. again debates the contentious issue of tipped wages.

Currently, employers can pay specific workers, like servers and bartenders, a subminimum wage of $5.35 an hour with the expectation that their tips will increase their total earnings up to the city’s minimum wage of $16.10 an hour. If that does not happen, employers legally have to make up the difference. This election season, D.C. voters get to decide whether to phase out the tipped wage system (again) and require employers of tipped workers to front the full prevailing minimum wage by 2027. (For more information on the ballot initiative, read DCist/WAMU’s explainer.)

The report on the apparent non-compliance with D.C.’s reporting requirements was published by two groups that want to phase out D.C.’s tipped minimum wage, D.C. Jobs With Justice and the Restaurant Opportunity ​Center of D.C. In fact, the Restaurant Opportunity ​Center of D.C. is a local chapter of a national organization that’s been working to get the tipped wage on the ballot in various states.

The pro-Initiative 82 groups argue their report, based on data obtained from D.C. Department of Employment Services, illustrates the lack of transparency around tipped wages and raises concerns about the level of wage theft under the current system. The groups say their members got the public records after taking the agency to court.

Their report says 35% of local ​restaurants — or 498 of the 1,420 total businesses with a liquor license identified by the groups — have reported wage data at least once in a year’s time, or between April 2021 and March 2022. Only 11% of restaurants, or 162 ​businesses with a liquor license, reported quarterly to DOES, as the law requires. The report also highlighted compliance among smaller businesses, including Elle, Satay Club, Das, Las ​Placitas, and Aroi.  The analysis concludes that 65% of bars and restaurants​ with liquor licenses, or 922 businesses, do not report wage data, offering a snapshot of widespread noncompliance.

“This is just the tip of the iceberg,” said Elizabeth Falcon, the executive director with D.C. Jobs With Justice, “It doesn’t tell us what is happening with the busser. It doesn’t tell us what’s happening with the dishwashers [both who are non-tipped workers]… We have to understand what’s happening in these businesses [because then] people will be exploited — women, people of color, immigrants.”

But the Restaurant Association of Metropolitan Washington says the report highlights the failure of D.C. government, not bar and restaurant owners.

“The legal obligation to report tipped wages was, by the council, put on third-party payroll providers, not restaurants,” Andrew Kline, the legislative counsel for the association, tells DCist/WAMU. “Suggestions that restaurant operators are somehow in violation of not reporting is downright slanderous.”

DOES does give employers of tipped workers the ability to upload an electronic file with the requested tipped wage data on a portal for employers to submit other data like unemployment insurance, as well as offers instructions on how to do that. Owners could also submit wage data in hard copy form or other means. “If restaurants are confused about how to come into compliance with the law, they can reach out to DOES to clarify,”  Falcon tells DCist/WAMU. “Further, RAMW should be holding its members to the highest level of accountability.”

To produce the report, the pro Initiative 82 groups compared the data submitted by hundreds of businesses to the D.C. Alcoholic Beverage Regulation Administration’s 2022 liquor license rosters, specifically looking at businesses categorized as Bars, Restaurants, ​Pubs, and Nightclubs. (That means that food establishments that do not ​have liquor licenses but pay workers the tipped minimum wage are not included in the analysis.)

The report focuses on bars and restaurants, which employ most of the city’s tipped workers. However, other businesses like hotels and nail salons employ tipped workers and thus have to comply with reporting requirement under the Tipped Wage Workers Fairness Amendment Act, effective December 2018.

During a press conference on Wednesday, Falcon said the report shows how the restaurant industry can be opaque, particularly for workers. She also said that the groups looked into the restaurant industry because national data suggests significant wage theft there. Some local owners and their workers have pushed back against accusations of rampant wage theft. Because 96% of D.C. restaurants are independently owned, they believe owners are less likely to exploit their workers.

The report does not shed anymore light on whether wage theft is common among D.C. bars and restaurants. However, Falcon said that the groups are looking into that next. She said she expects the data from the public records request to “generally show compliance” of labor law because they submitted wage data. She also said groups already identified a few businesses that paid their tipped workers below the required base wage. But those businesses paid their workers based on dated requirements, suggesting to her that they weren’t intending to steal from their workers. (D.C.’s minimum wages are tethered to inflation, so increase every so often.)

Lawmakers have struggled to implement or enforce the 2018 law, which also created an anonymous tip line so the public can report wage theft and mandated training on preventing sexual harassment and complying with minimum-wage laws for managers. Those elements of the law were also slow to roll out.

Payroll companies are supposed to report the wage data quarterly, but DOES had not enforced the law this year because of funding constraints and pushback from the National Payroll Reporting Consortium, whose members described the requirements as onerous and threatened to pull out.

DOES did not immediately respond to request for comment regarding enforcement of the 2018 law.

Sam Rosen-Amy, the chief of staff for Councilmember Elissa Silverman (I-At Large), who chairs the council’s labor committee, says they expect tipped wage employers to use the portal that does exist to submit wage data.

“We are disappointed that the agency has not implemented the changes to the tipped wage portal,” he says via email, alluding to the available employer portal. “This report shows why we passed the law in the first place: there’s not a lot of compliance with the current tipped wage portal, and the information required under the original law is limited. Directly linking the portal to the payroll companies, as envisioned by the new law, would create a powerful tool to fight wage theft.”

(Kline said Silverman is aware of the issues restaurants and payroll companies have been having complying with the 2018 law.)

Justin Zelikovitz, a managing attorney at the DCWageLaw firm which represents workers who allege they aren’t being properly paid, told DCist/WAMU in April that he never encountered a restaurant that reports the required wage data and questioned whether DOES actually uses payroll data to go after wage theft.

“The employers that were either intentionally or unintentionally violating the law — they’re not doing any of this,” Zelikovitz told DCist/WAMU. “The employers that are doing it right — they just have more burdens.”

“It’s insanely complex,” he said of the 2018 law. “And it’s all designed to address a problem that shouldn’t even exist.” He supports eliminating the tipped minimum wage.

Restaurant worker Jaryd Spann, who chairs the Tipped Workers Coordinating Council, said the report underscores that lawmakers didn’t have the foresight on how the 2018 law would be implemented or enforced.

“No one took it seriously,” he said during the press conference.