Wage and Hour Laws FAQ

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Do I have to pay minimum wage to employees who receive tips?

It depends on how generous your customers are. Under federal law, as long as an employee routinely earns at least $30 per month in tips, you can pay the employee as little as $2.13 an hour. However, the amount you pay plus the tips the employee actually earns must bring the employee's earnings up to the minimum wage level. If the employee's total earnings fall short of the minimum wage, you must 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).

For more information on minimum wage laws, see Nolo's article Paying Tipped Employees: Tip Credits and Tip Pooling

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