Need to keep away from breaking labor legal guidelines? Then you must pay staff in response to federal, state, or native minimal wage regulation. However if in case you have tipped staff, you may be capable to pay a decrease, tipped minimal wage.
Learn on to be taught what’s a tipped minimal wage, together with the present federal tipped wage and the tipped minimal wage by state.
What’s the tipped minimal wage?
The tipped minimal wage, or minimal money wage, is the bottom quantity you possibly can pay a tipped worker per hour of labor. A “tipped worker” is a employee in a service trade (e.g., restaurant) who usually and frequently receives greater than $30 per thirty days in ideas. The tipped minimal wage is decrease than the common minimal wage as a result of employers can declare a tip credit score.
The tip credit score is the distinction between the minimal wage and the tipped minimal wage. There’s a federal tipped minimal wage. However just like the common minimal wage price, the money wage can fluctuate relying on what state what you are promoting is in.
It’s essential to pay staff the greater of the:
- Federal tipped minimal wage
- State tipped minimal wage
Federal minimal wage for tipped staff
The federal minimal wage for servers and different tipped staff is $2.13 per hour. It’s essential to pay your tipped staff a minimum of $2.13 per hour.
The common minimal wage is presently $7.25 per hour, that means employers can declare a most tip credit score of $5.12 per hour ($7.25 – $2.13 = $5.12).
If you wish to use the FLSA tip credit score and pay staff the minimal money wage, you must present particulars. Inform staff:
- Their hourly wage (a minimum of $2.13 per hour)
- The extra quantity you’re claiming as a tip credit score (most $5.12)
- That the tip credit score you declare can’t exceed the information your staff obtain
- That your staff retain their ideas (except you will have a tip pooling settlement)
- The tip credit score doesn’t apply to anybody except you notify the staff
Failing to inform your staff concerning the above means you need to pay them the common minimal wage and allow them to preserve their ideas. You may allow them to know orally or in writing.
Tipped minimal wage by state
Once more, the federal tipped minimal wage price might not apply to what you are promoting. State regulation trumps federal if it’s extra beneficiant to staff.
- Follows the federal tipped minimal wage regulation
- Doesn’t permit any tipped minimal wage
- Units a state tipped minimal wage
Take into account that your state’s definition of who is taken into account a “tipped worker” could also be completely different than the federal definition. For instance, employees are thought-about tipped staff in the event that they make greater than $20—not $30—per thirty days in Massachusetts.
So, what does your state require? Have a look under.
States that comply with the federal tipped minimal wage
In the case of the tipped wage, these states comply with the federal price of $2.13 per hour:
| Alabama | Mississippi | Texas |
| Georgia | Nebraska | Utah |
| Indiana | North Carolina | Virginia |
| Kansas | Oklahoma* | Wyoming |
| Kentucky | South Carolina | |
| Louisiana | Tennessee |
*The DOL classifies this as a state that units a better tipped minimal wage than the federal price. Nevertheless, Oklahoma’s present price is $2.13, which is identical because the federal price. For extra data, contact Oklahoma’s division of labor.
Verify along with your state for extra data on their particular guidelines. For instance, you can’t declare the tip credit score in North Carolina except you obtain a signed certification of your staff’ ideas month-to-month or every pay interval (e.g., tip reporting sheet).
States that don’t permit a tipped minimal wage
Once more, not all states let employers pay staff a tipped minimal wage. The next states require that employers pay staff a minimum of the common state minimal wage along with the worker’s collected ideas:
| Alaska | Montana | Washington |
| California | Nevada | |
| Minnesota | Oregon |
If what you are promoting is situated in one of many above states, don’t attempt to pay staff the minimal money wage.
States that set a state tipped minimal wage
The vast majority of states set their very own minimal wage for tipped staff that’s above the federal price of $2.13:
| Arizona | Iowa | North Dakota |
| Arkansas | Maine | Ohio |
| Colorado | Maryland | Pennsylvania |
| Connecticut | Massachusetts | Rhode Island |
| Delaware | Michigan | South Dakota |
| D.C. | Missouri | Vermont |
| Florida | New Hampshire | Wisconsin |
| Hawaii | New Jersey | West Virginia |
| Idaho | New Mexico | |
| Illinois | New York |
In case your state units its personal minimal money wage, there could also be some further state guidelines to bear in mind. For instance, your state may:
- Enable a tip credit score if the worker’s mixed hourly wage and ideas is a specific amount greater than the relevant minimal wage (e.g., Hawaii)
- Solely apply the state regulation to employers with a sure variety of staff (e.g., West Virginia)
- Solely apply the regulation to staff over a sure age (e.g., Wisconsin)
2025 Minimal wage for tipped staff: Chart
Need to know the way a lot you need to pay tipped staff? Use the chart under to seek out out.
States with an * by their title don’t permit a separate minimal wage for tipped staff. The quantity listed is identical minimal wage you need to present to your non-tipped staff.
| State | Tipped Minimal Wage |
|---|---|
| Alabama | $2.13 |
| Alaska* | $11.91 |
| Arizona | $11.70 |
| Arkansas | $2.63 |
| California* | $16.50 |
| Colorado | $11.79 |
| Connecticut | $8.23 (Bartenders who usually obtain ideas) $6.38 (Staff who work in a lodge or restaurant) |
| D.C. | $10.00 |
| Delaware | $2.23 |
| Florida | $9.98 |
| Georgia | $2.13 |
| Hawaii | $12.75 |
| Idaho | $3.35 |
| Illinois | $9.00 |
| Indiana | $2.13 |
| Iowa | $4.35 |
| Kansas | $2.13 |
| Kentucky | $2.13 |
| Louisiana | $2.13 |
| Maine | $7.33 |
| Maryland | $3.63 |
| Massachusetts | $6.75 |
| Michigan | $4.01 |
| Minnesota* | $11.13 |
| Mississippi | $2.13 |
| Missouri | $6.88 |
| Montana* | $10.55 (Companies with gross annual gross sales over $110,000) $4.00 (Companies with gross annual gross sales of $110,000 or much less that aren’t lined by the FLSA) |
| Nebraska | $2.13 |
| Nevada* | $12.00 |
| New Hampshire | $3.27 |
| New Jersey | $5.62 |
| New Mexico | $3.00 |
| New York | $13.75 (Tipped service staff in New York Metropolis, Lengthy Island, and Westchester) $11.00 (Tipped meals service employees in New York Metropolis, Lengthy Island, and Westchester) $12.90 (Tipped service staff within the the rest of New York state) $10.35 (Tipped meals service employees within the the rest of New York state) |
| North Carolina | $2.13 |
| North Dakota | $4.86 |
| Ohio | $5.35 (Employers with annual gross receipts of $394,000 or extra) |
| Oklahoma | $2.13 |
| Oregon* | $14.70 (Employers in normal areas) $15.95 (Employers in Portland metro space) $13.70 (Employers in nonurban counties) |
| Pennsylvania | $2.83 |
| Rhode Island | $3.89 |
| South Carolina | $2.13 |
| South Dakota | $5.75 |
| Tennessee | $2.13 |
| Texas | $2.13 |
| Utah | $2.13 |
| Vermont | $7.01 |
| Virginia | $2.13 |
| Washington* | $16.66 |
| West Virginia | $2.62 |
| Wisconsin | $2.33 |
| Wyoming | $2.13 |
Once more, test along with your state on particular tips concerning the tipped minimal wage.
Your staff don’t earn sufficient ideas. Now what?
The purpose of a tip credit score is for workers’ mixed minimal money wage and tricks to be greater than the common minimal wage.
If an worker’s tipped minimal wage and ideas are usually not sufficient to achieve the minimal wage, you need to make up the distinction.
Want a neater method to run payroll for tipped staff, non-tipped staff, or each? With Patriot’s payroll, you possibly can add tricks to every worker’s paycheck and withhold taxes with ease. Begin your free trial now!
This text has been up to date from its authentic publication date of September 4, 2019.
This isn’t supposed as authorized recommendation; for extra data, please click on right here.