Tipped minimum wage by state: cash wage and tip credit
Under federal law, a restaurant or bar can pay a tipped employee as little as $2.13 an hour in cash, as long as tips bring the total to at least the minimum wage. Many states set a higher cash wage, and some do not allow the tip credit at all.
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Key takeaways
- The federal cash wage for tipped employees is $2.13 an hour; tips must make up the rest of $7.25.1
- 7 states require the full minimum wage before tips.
- If wages plus tips fall short of the minimum wage in a workweek, the employer must pay the difference.1
- Employers and managers may never keep any part of employees' tips.1
Quick facts
| Federal cash wage | $2.13 an hour |
|---|---|
| Federal tip credit | Up to $5.12 an hour |
| Who counts as tipped | Regularly receives more than $30 a month in tips |
| Service charges | A compulsory service charge is not a tip |
How the tip credit works
A tipped employee is someone who customarily and regularly receives more than $30 a month in tips, such as a server or a bartender. For these employees, federal law lets the employer pay a lower cash wage and count part of the tips toward the minimum wage. The part counted is the tip credit.1
Under federal law the cash wage must be at least $2.13 an hour, so the tip credit can be at most $5.12 an hour, the difference between $2.13 and $7.25. The credit can never be larger than the tips the employee actually received. If cash wages plus tips for a workweek come to less than the minimum wage for every hour worked, the employer must make up the difference.1
Before taking a tip credit, the employer must tell the employee the cash wage, the amount of the credit, that the credit cannot exceed the tips received, and that the employee keeps all tips except through a valid tip pool. An employer that has not given this notice cannot take the credit.1
Tipped minimum wage in every state
The cash wage below is the least an employer can pay per hour before tips. Where the tip credit is not allowed, it equals the full minimum wage. Rates are as of the date shown and come from each state page, where the source is cited.
| State | Tip credit | Cash wage | Full minimum |
|---|---|---|---|
| Alabama | Allowed | $2.13 | $7.25 |
| Alaska | Not allowed | $14.00 | $14.00 |
| Arizona | Allowed | $12.15 | $15.15 |
| Arkansas | Allowed | $2.63 | $11.00 |
| California | Not allowed | $16.90 | $16.90 |
| Colorado | Allowed | $12.14 | $15.16 |
| Connecticut | Allowed | $6.38 | $16.94 |
| Delaware | Allowed | $2.23 | $15.00 |
| District of Columbia | Allowed | $10.30 | $18.40 |
| Florida | Allowed | $11.98 | $15.00 |
| Georgia | Allowed | $2.13 | $7.25 |
| Hawaii | Allowed | $14.75 | $16.00 |
| Idaho | Allowed | $3.35 | $7.25 |
| Illinois | Allowed | $9.00 | $15.00 |
| Indiana | Allowed | $2.13 | $7.25 |
| Iowa | Allowed | $4.35 | $7.25 |
| Kansas | Allowed | $2.13 | $7.25 |
| Kentucky | Allowed | $2.13 | $7.25 |
| Louisiana | Allowed | $2.13 | $7.25 |
| Maine | Allowed | $7.55 | $15.10 |
| Maryland | Allowed | $3.63 | $15.00 |
| Massachusetts | Allowed | $6.75 | $15.00 |
| Michigan | Allowed | $5.49 | $13.73 |
| Minnesota | Not allowed | $11.41 | $11.41 |
| Mississippi | Allowed | $2.13 | $7.25 |
| Missouri | Allowed | $7.50 | $15.00 |
| Montana | Not allowed | $10.85 | $10.85 |
| Nebraska | Allowed | $2.13 | $15.00 |
| Nevada | Not allowed | $12.00 | $12.00 |
| New Hampshire | Allowed | $3.27 | $7.25 |
| New Jersey | Allowed | $6.05 | $15.92 |
| New Mexico | Allowed | $3.00 | $12.00 |
| New York | Allowed | $11.35 | $17.00 |
| North Carolina | Allowed | $2.13 | $7.25 |
| North Dakota | Allowed | $4.86 | $7.25 |
| Ohio | Allowed | $5.50 | $11.00 |
| Oklahoma | Allowed | $2.13 | $7.25 |
| Oregon | Not allowed | $15.55 | $15.55 |
| Pennsylvania | Allowed | $2.83 | $7.25 |
| Rhode Island | Allowed | $3.89 | $16.00 |
| South Carolina | Allowed | $2.13 | $7.25 |
| South Dakota | Allowed | $5.925 | $11.85 |
| Tennessee | Allowed | $2.13 | $7.25 |
| Texas | Allowed | $2.13 | $7.25 |
| Utah | Allowed | $2.13 | $7.25 |
| Vermont | Allowed | $7.21 | $14.42 |
| Virginia | Allowed | $2.13 | $12.77 |
| Washington | Not allowed | $17.13 | $17.13 |
| West Virginia | Allowed | $2.62 | $8.75 |
| Wisconsin | Allowed | $2.33 | $7.25 |
| Wyoming | Allowed | $2.13 | $7.25 |
Some states add conditions, such as a higher monthly tip threshold, a tip credit limited to certain industries, or a separate cash wage for small employers. The state pages list them. Cities and counties with their own minimum wage can also set their own tipped rules; each local page shows them.
Rules that apply everywhere
- Employers cannot keep tips. The law prohibits employers, managers and supervisors from keeping any portion of employees’ tips, directly or through a tip pool. A manager may keep only tips from customers the manager served personally.1
- Tip pools. An employer that takes a tip credit can require a tip pool only among employees who customarily receive tips, such as servers, bartenders and bussers. An employer that pays the full minimum wage can also include employees who are not tipped, such as cooks and dishwashers.1
- Service charges are not tips. A compulsory charge, such as 15% added to the bill, belongs to the employer and does not count as a tip.1
- Dual jobs. An employee who works as a server and also in a job that is not tipped is a tipped employee only for the time worked as a server.1
The tip credit itself is set by section 3(m) of the Fair Labor Standards Act.3 State rules on tip credits, tip pools and service charges are often stricter; when they are, the stricter rule applies.
If you are paid less
If your employer takes a tip credit but your wages plus tips do not reach the minimum wage, or your employer keeps part of your tips, you can file a complaint with your state labor department or with the U.S. Department of Labor’s Wage and Hour Division at 1-866-487-9243. The agency for each state is listed under “Get help or file a claim” on its page.
Sources
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- 3
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