Table of contents
Please note that the information contained in this article is limited in scope and is only intended as a high-level overview of the topics discussed. The information is current as of the publication date only, and the laws (and associated agency and/or judicial interpretations) on the topics discussed could change at any point in the future. Block, Inc. (including its affiliates, subsidiaries, employees, officers, directors, attorneys, and tax advisors) undertakes no obligation to update this article for future changes in the law. In addition, laws vary by jurisdiction, and this article does not attempt to address all jurisdictions — for example, states, counties, or cities often have requirements that differ from federal law. Nothing in this article is or should be used as tax or legal advice. In particular, this article cannot be relied upon for the purposes of avoiding taxes, penalties, or other obligations under applicable law. For guidance or advice specific to your business, you should consult with a qualified tax and/or legal professional.
Washington, D.C. has considered minimum wage raises for years. With increases that took effect in 2022, there may be some confusion for businesses. That’s why we’ve compiled a guide to help those in the D.C. area understand the impact of recent and upcoming minimum wage changes. This way, you can plan ahead and strategize accordingly.
Let’s dive into Washington’s minimum wage for 2023 and beyond.
What is the minimum wage in Washington?
The minimum hourly wage for non-tipped employees in Washington increased to $16.10 on July 1, 2022. The minimum wage for tipped employees increased to $5.35 per hour. However, if an employee’s hourly earnings with tips — based on a weekly average — do not equal D.C.’s full minimum wage, the employer must pay the difference.
This increase applies to all individuals who work within the District of Columbia. A person is considered to work in the district when:
- the individual regularly spends more than 50% of his or her working time in the District of Columbia; or
- the individual’s employment is based in the District of Columbia and the individual regularly spends a substantial amount of his or her working time in the District of Columbia and not more than 50% of their working time in any particular state
Will the minimum wage change in 2023?
In November, 2022, D.C. passed an initiative to eliminate the sub-minimum tipped wage so that all tipped workers will receive the full minimum wage of at least $16.10 plus tips. The minimum regular cash wage will increase to $6 with a $10.10 maximum tip credit, effective Jan. 1, 2023. The minimum regular cash wage will continue to increase each year until it reaches $16.10 on July 1, 2027, with no maximum tip credit.
How should small-business owners prepare for changes to the minimum wage in Washington?
The minimum wage in Washington recently increased to $16.10, and that increase impacts employees and business owners across the District of Columbia. Here are some key considerations for employers to keep in mind over the coming months:
- Know your stuff: Stay on top of the latest news when it comes to shifting legislation. This will ensure you’re one step ahead when the changes do take effect as new laws are passed.
- Evaluate your staffing: Take a look at your hourly, weekly, and monthly sales to determine whether your current staffing levels are appropriate. Based on those sales and the rest of your finances, make a plan for any future hiring. Maybe you need to add a new full-time employee each year. Or maybe your sales are seasonal and hiring contract employees during your busy seasons makes more sense.
- Hire the best: Hiring the right people is always important, but doubly so when you operate a small business. So take your time and cast a wide net when recruiting new employees. Once you have your team in place, prioritize employee retention by offering a path to growth and development and by making your business an attractive place to work.
- Upgrade your technology: When you automate complicated, time-consuming aspects of management, such as payroll, you can focus more on staffing and growing your business. Learn how to do payroll yourself, how to avoid common payroll mistakes, and how to get your free EIN before you start the hiring process.