Hunton Employment & Labor Perspectives

Voters in the District of Columbia, Nebraska, and Nevada overwhelmingly approved minimum wage-related ballot initiatives during this year’s midterm elections.  The political movement to establish a $15.00 minimum wage started in 2012 when 200 New York City fast food workers walked off the job demanding better pay and union rights.  Despite inaction by the federal government in the subsequent decade, there continues to be bipartisan support for minimum wage increases, particularly at the state level, as illustrated by the success of these three ballot measures.

District of Columbia to Phase Out Tipped Minimum Wage by 2027

DC voters passed Initiative 82 (the “District of Columbia Tip Credit Elimination Act”) which will gradually raise the tipped minimum wage from $5.35 per hour to match the non-tipped minimum wage of $16.10.  The first phase will take effect on January 1, 2023, raising the minimum hourly wage for tipped workers to $6.00.  The tipped minimum wage will jump again to $8.00 on July 1, 2023 and increase by $2.00 each year until July 1, 2027.  D.C. joins seven states that have abolished the tipped minimum wage. 

In 2018, voters approved a virtually identical ballot initiative to eliminate the tipped minimum wage, but the D.C. Council voted to repeal the measure before it took effect.  D.C. Council Chairman Phil Mendelson has reported that the council will not attempt to override the vote on Initiative 82.

Importantly, Initiative 82 does not appear to impact employers’ obligations under the 2018 Tipped Wage Workers Fairness Amendment Act, which requires D.C. employers with at least one employee who is paid a tipped minimum wage to comply with certain reporting and training requirements. 

Nebraska to Increase Minimum Wage to $15 Per Hour by 2026

Voters in Nebraska approved a gradual increase of the state minimum hourly wage from $9.00 to $15.00 in January 2026, starting with an increase to $10.50 on January 1, 2023.  Beginning on January 1, 2027 and each subsequent year, the measure requires the state to make annual adjustments to the minimum wage based on inflation.  The ballot measure does not impact the state’s tip credit law, which allows employers to pay tipped employees at a rate of $2.13 per hour.

Nevada Amends State Constitution to Increase Minimum Wage and Eliminate Two-Tier Minimum Wage System

Nevada voters approved Ballot Question 2, which amends the state constitution to increase the minimum hourly wage from $10.50 to $12.00, effective July 1, 2024, subject to any applicable increases above $12.00 per hour provided by federal law or enacted by the state legislature.

The measure also eliminates Nevada’s existing two-tier minimum wage system that permits employers who offer qualified health benefits to non-exempt employees to pay employees $1.00 less per hour than employers who do not offer such benefits.  Existing provisions in the state constitution for adjusting the minimum wage based on cost-of-living increases are also removed by the ballot initiative. 

Conclusion Employers should be aware of the effective dates of these new requirements, particularly where the law provides for a phased increase in the minimum wage.  With a divided Congress for the next two years, the battle to raise the minimum wage will likely remain at the state and local level, where it has proven to be popular with voters across the political spectrum.