January 31, 2024
As a hospitality owner, manager, or employee, understanding the intricacies of minimum wage regulations for tipped workers is crucial. Compliance with these laws can be a challenging task, especially when it comes to factors like overtime calculations. What makes it even more complex is that these rules can vary significantly depending on your location within the United States. If you operate multiple restaurants or hospitality establishments, it's vital to be well-informed about the tipped minimum wage laws that apply to your area.
Under federal law, a tipped employee is someone who consistently receives at least $30 per month in tips. However, it's important to note that different states may have varying thresholds for classifying workers as tipped employees.
For example, in the following states, employees only need to receive $20 per month in tips to be considered tipped workers:
On the other hand, five states have no specific state laws governing minimum wage for tipped employees. These states are:
The tipped minimum wage represents the lowest hourly wage that an employee can earn. It consists of a basic cash wage, which the employer must pay, and a tip credit, which the employer can claim. While federal law sets the minimum base wage at $2.13 per hour, many states have higher minimums in place. In some states, employers are required to pay tipped employees the full state minimum wage before factoring in tips.
To calculate the minimum wage for tipped employees, you can use a tip calculator like the one available at CalculatorSoup. This tool will help you determine the appropriate wages, considering both tips and the minimum wage in your state.
To help you stay up-to-date with the latest labor laws, here is a a comprehensive breakdown of tipped minimum wage rates by state for the year 2024.
| State | Minimum Wage | Maximum Tip Credit | Tipped Minimum Wage (Total) | State-Specific Courses |
|---|---|---|---|---|
| Federal | $7.25 | $5.12 | $2.13 | б═ |
| Alabama | $7.23 | N/A | N/A | Alabama Courses |
| Alaska | $11.73 | N/A | N/A | Alaska Courses |
| Arizona | $14.35 | $3.00 | $11.35 | Arizona Courses |
| Arkansas | $11.00 | $8.37 | $2.63 | Arkansas Courses |
| California1 | $16.00 | N/A | N/A | California Courses |
| Colorado | $14.42 | $3.02 | $11.40 | Colorado Courses |
| Connecticut | $15.69 | $9.31 (bartender $7.46) | $6.38 (bartender $8.23) | Connecticut Courses |
| Delaware | $13.25 | $11.02 | $2.23 | Delaware Courses |
| Florida | $13.00 | $3.02 | $9.98 | Florida Courses |
| Georgia | $7.25 | N/A | N/A | Georgia Courses |
| Hawaii | $14.00 | $1.25 | $12.75 | Hawaii Courses |
| Idaho | $7.25 | $3.90 | $3.35 | Idaho Courses |
| Illinois | $14.00 | $5.60 | $8.40 | Illinois Courses |
| Indiana | $7.25 | $5.12 | $2.13 | Indiana Courses |
| Iowa | $7.25 | $2.90 | $4.35 | Iowa Courses |
| Kansas | $7.25 | $5.12 | $2.13 | Kansas Courses |
| Kentucky | $7.25 | $5.12 | $2.13 | Kentucky Courses |
| Louisiana | $7.25 | N/A | N/A | Louisiana Courses |
| Maine | $14.15 | $7.07 | $7.08 | Maine Courses |
| Maryland | $15.00 | $11.37 | $3.63 | Maryland Courses |
| Massachusetts | $15.00 | $8.25 | $6.75 | Massachusetts Courses |
| Michigan | $10.33 | $6.40 | $3.93 | Michigan Courses |
| Minnesota | $10.85 | N/A | N/A | Minnesota Courses |
| Mississippi | $7.25 | N/A | N/A | Mississippi Courses |
| Missouri | $12.30 | $6.15 | $6.15 | Missouri Courses |
| Montana | $10.30 | N/A | N/A | Montana Courses |
| Nebraska | $12.00 | $9.87 | $2.13 | Nebraska Courses |
| Nevada | $12.00 | N/A | N/A | Nevada Courses |
| New Hampshire | $7.25 | $3.99 | $3.26 | New Hampshire Courses |
| New Jersey | $12.00 | $8.97 (bartender $7.45) | $3.03 (bartender $4.55) | New Jersey Courses |
| New Mexico | $10.50 | $7.25 (bartender $6.25) | $3.25 (bartender $4.25) | New Mexico Courses |
| New York | $13.20 | $7.65 | $5.55 | New York Courses |
| North Carolina | $7.25 | $5.12 | $2.13 | North Carolina Courses |
| North Dakota | $7.25 | $3.12 | $4.13 | North Dakota Courses |
| Ohio | $8.80 | $4.53 | $4.27 | Ohio Courses |
| Oklahoma | $7.25 | $5.12 | $2.13 | Oklahoma Courses |
| Oregon | $12.00 | $3.25 | $8.75 | Oregon Courses |
| Pennsylvania | $7.25 | $5.12 | $2.13 | Pennsylvania Courses |
| Rhode Island | $11.50 | $7.25 | $4.25 | Rhode Island Courses |
| South Carolina | $7.25 | N/A | N/A | South Carolina Courses |
| South Dakota | $9.45 | $5.12 | $4.33 | South Dakota Courses |
| Tennessee | $7.25 | $5.12 | $2.13 | Tennessee Courses |
| Texas | $7.25 | $5.12 | $2.13 | Texas Courses |
| Utah | $7.25 | N/A | N/A | Utah Courses |
| Vermont | $12.55 | $8.00 | $4.55 | Vermont Courses |
| Virginia | $9.50 | $5.12 | $4.38 | Virginia Courses |
| Washington | $13.69 | $1.13 | $12.56 | Washington Courses |
| Washington DC | $15.00 | N/A | N/A | Washington DC Courses |
| West Virginia | $8.75 | $6.43 | $2.32 | West Virginia Courses |
| Wisconsin | $7.25 | $5.12 | $2.13 | Wisconsin Courses |
| Wyoming | $7.25 | N/A | N/A | б═ |
The debate over whether to eliminate or adjust tipped or subminimum wage rates is ongoing. Some states, including Alaska, California, Colorado, Delaware, Hawaii, Maine, Maryland, New Hampshire, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, have already banned the use of subminimum wages for certain residents.
While many small business owners argue that eliminating subminimum wages would have adverse financial effects on their companies, proponents of a fair minimum wage for all employees, as advocated by the Center for American Progress, believe it can reduce poverty and stimulate economic growth.
Although federal law sets the minimum basic cash wage at $2.13 per hour, it's important to be aware that many states require higher minimums.
Tip Credit Against Minimum Wage
For restaurant employees who receive tips, they are entitled to a minimum wage of at least $2.13 per hour. If an employee's tips do not bring their earnings up to the federal minimum wage, employers can claim a tip credit of up to $5.12 against the federal minimum wage, provided that it aligns with their state's minimum wage rate.
To make precise calculations for your employees and ensure compliance with your state's regulations, you can utilize a tax credit calculator like the one available at Paychex. This tool will assist employers in determining the applicable tip credits and tax liabilities.
For restaurant employees who receive tips, they are entitled to a minimum wage of at least $2.13 per hour. If an employee's tips do not bring their earnings up to the federal minimum wage, employers can claim a tip credit of up to $5.12 against the federal minimum wage, provided that it aligns with their state's minimum wage rate.
Please remember that LIQUORexam.com is not a legal, tax, benefit, accounting, or investment advisor. Any information provided should be confirmed by consulting your company's legal, tax, benefit, accounting, or investment advisor before making any decisions.
For further insights into the hospitality industry and related training, you can explore our blog articles:
