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  • Writer's pictureCenter for Local Policy Analysis (CLPA)

Bill 35-23, Proposes Changes to Tipped Worker Wages in Montgomery County

Recently, Bill 35-23, known as the County Minimum Wage-Tipped Workers Act, was introduced, which Councilmembers Jawando and Mink sponsored. This bill addresses the current practice of allowing employers to consider a "tip credit" when calculating the minimum wage for tipped workers in the County. In a nutshell, if one is a worker who usually gets more than $30 in tips each month and your employer tells you about it, they can use some of your tip money to count towards your minimum wage. But they have to make sure you still earn at least the regular minimum wage for all the hours you work.

Under the existing County law, this tip credit is set at the hourly minimum wage minus $4.00. However, it can be reduced if the employee or their representative can demonstrate to the Office of Human Rights Executive Director that they receive less in tips.

This bill proposes significant changes to this practice. It intends to phase out and eliminate the tip credit for minimum wage workers by July 1, 2028. The bill establishes a gradual reduction in the allowable tip credit during the transition period leading up to this date. Specifically, the tip credit amount employers can include in the minimum wage calculation would be capped at an amount lower than the County's minimum wage.

This bill modifies the rules for tipped employees in the County. This change outlines a gradual reduction and eventual elimination of the tip credit amount that employers can factor into the minimum wage calculation for tipped employees:

  1. Until July 1, 2024, the tip credit amount cannot exceed $4.00 per hour.

  2. Starting from July 1, 2024, until July 1, 2025, it can't exceed $6.00 per hour.

  3. From July 1, 2025, until July 1, 2026, the maximum tip credit is $8.00 per hour.

  4. From July 1, 2026, until July 1, 2027, it's limited to $10.00 per hour.

  5. Finally, from July 1, 2027, until July 1, 2028, the maximum tip credit is $12.00 per hour.

Here is a copy of the Bill 35-23, the County Minimum Wage-Tipped Workers Act:



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