Employee Wage and Hour Rights FAQ

If I get paid tips, can my employer pay me less than minimum wage?

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If I get paid tips, can my employer pay me less than minimum wage?

Whether your employer can pay you less than the minimum wage when you earn tips depends on how much money you make in tips and on your state's laws. Generally, an employer must pay all employees covered by state and federal wage and hour laws the federal minimum wage (currently $7.25 an hour) or the state's minimum wage, whichever is higher.

The law gets a bit trickier, however, if you earn tips. Under federal law, an employer is allowed to pay a lower minimum wage -- only $2.13 an hour -- if the employee routinely earns at least $30 per month in tips. But the employer can do this only if the worker's wages plus tips add up to at least the minimum wage for each hour worked. If the worker ends up earning less than the minimum wage even when tips are figured into the bargain, the employer has to make up the difference.

Some states, including California, don't allow employers to pay tipped employees less than the minimum wage. And some states require employers to pay a higher hourly amount to tipped employees, though still less than the state or federal minimum wage. To find out about the rules for workers who earn tips in your state, contact your state's labor department or go to www.dol.gov/whd/state/tipped.htm on the U.S. Department of Labor's website. For more information on tip credits and tip sharing, see Nolo's article Tips, Tip Pooling, and Tip Credits: What Service Employees Need to Know.

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