The federal minimum wage for servers is $2.13 per hour in direct cash wages, provided that tips bring the server’s total earnings to at least $7.25 per hour for every workweek. The $5.12 gap between those two figures is the “tip credit,” and an employer can only claim it by following a specific set of rules. Miss any of them, and the server is owed the full $7.25 for every hour worked.
Who Counts as a Tipped Employee
Not every restaurant worker qualifies for the $2.13 rate. Under federal law, a tipped employee is one who customarily and regularly receives more than $30 a month in tips.1eCFR. 29 CFR 531.56 – More Than $30 a Month in Tips Fall below that threshold in a given month, and you’re not a tipped employee for that period. The employer owes the full $7.25 rate.
What the Employer Must Tell You First
An employer cannot quietly start paying $2.13. Before claiming the tip credit, the employer has to notify each tipped worker of several things: the direct cash wage being paid (at least $2.13), the tip credit amount being claimed (up to $5.12), that the tip credit cannot exceed the tips you actually receive, and that you keep all your tips except for amounts contributed to a valid tip pool.2U.S. Department of Labor. Fact Sheet 15 Tipped Employees Under the Fair Labor Standards Act
Notice can be oral or written. Skip it, and the employer loses the tip credit entirely. That means paying the full $7.25 for every hour worked under the lower rate, and the liability is retroactive. Liquidated damages can double what’s owed.
When the Employer Has To Make Up the Difference
The tip credit only functions when tips actually cover the gap. If your $2.13 cash wage plus tips doesn’t reach $7.25 for a given workweek, the employer must pay the shortfall.2U.S. Department of Labor. Fact Sheet 15 Tipped Employees Under the Fair Labor Standards Act This is calculated week by week, not averaged over a pay period or month. A slow week is the employer’s problem, not yours. If a dead shift or a bad section leaves your total under $7.25 per hour for the week and your check doesn’t reflect makeup pay, that’s a violation you can report to the Wage and Hour Division of the Department of Labor.
How Overtime Works on a Server’s Paycheck
Servers who work more than 40 hours in a workweek are entitled to overtime like any other covered employee. The wrinkle is that the tip credit stays fixed while the overtime rate goes up.
The regular rate is $7.25 (cash wage plus tip credit). Multiply by 1.5 for the overtime rate: $10.88. Subtract the $5.12 tip credit, and the employer owes at least $5.76 per hour in direct cash wages for each overtime hour.3U.S. Department of Labor. FLSA Overtime Calculator Advisor Paying $2.13 straight through and assuming tips fill the rest is a common mistake and a common source of wage claims. If your overtime hours look identical to your regular hours on the pay stub, check the math.
Tip Pool Rules
Restaurants often pool tips among the front-of-house staff. When the employer claims a tip credit, the pool has to be limited to workers who customarily receive tips: servers, bartenders, bussers, and similar roles. Managers and supervisors cannot receive any share of a pooled tip, period.4eCFR. 29 CFR 531.54 – Tip Pooling
A manager who personally waits on a table and gets a tip directly from that customer can keep that individual tip, but they still can’t participate in the pool.2U.S. Department of Labor. Fact Sheet 15 Tipped Employees Under the Fair Labor Standards Act The bar on employers and supervisors taking pooled tips applies whether or not a tip credit is claimed.
If the employer pays the full minimum wage and doesn’t claim the tip credit, the pool can be broader and include cooks, dishwashers, and other back-of-house staff. Managers and supervisors are still out.4eCFR. 29 CFR 531.54 – Tip Pooling A pool run incorrectly can cost the employer the entire tip credit and open the door to back-pay liability.
Side Work and Non-Tipped Tasks
Servers don’t spend every minute of a shift at a table. Rolling silverware, refilling condiments, and wiping down surfaces are part of the job. Whether those hours are covered by the tip credit or must be paid at the full minimum wage has been heavily litigated.
A 2021 Department of Labor rule set specific limits: tip-credit-eligible supporting work had to stay under 20 percent of the workweek, and no continuous stretch of non-tipped work could exceed 30 minutes. The Fifth Circuit vacated that rule, and in December 2024 the DOL removed the regulatory language from the Code of Federal Regulations.5Federal Register. Tip Regulations Under the Fair Labor Standards Act FLSA Restoration of Regulatory Language
What remains is the older “dual jobs” concept. If an employer uses a worker in two distinct roles, say server and janitor, the tip credit only applies to the tipped hours. Tasks that directly support tipped work, like setting tables before service, are generally still treated as part of the tipped occupation. Work unrelated to serving customers, such as deep-cleaning the kitchen or painting walls, has to be paid at the full minimum wage. Without the percentage caps, enforcement turns on the facts of the specific situation.
Uniforms and Service Charges
If your employer requires a uniform, the cost of buying and maintaining it is a business expense. Any deduction for it cannot bring your wages below $7.25 per hour in any workweek, and it cannot cut into overtime pay.6U.S. Department of Labor. Fact Sheet 16 Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act For a server already at $2.13 cash, that effectively rules out uniform deductions from the paycheck.
Automatic gratuities on large parties are not tips. Under federal rules they’re service charges, treated as wages rather than tips, and they don’t count toward the tip credit. A voluntary tip is one the customer chooses to leave and sets the amount for. If the restaurant sets the amount and adds it to the bill, it’s a service charge no matter what the menu calls it.
Your State May Set a Higher Wage
The federal $2.13 is a floor. Several states ban the tip credit altogether and require employers to pay the full state minimum wage before tips. Others allow a tip credit but require a higher direct cash wage, with state minimums for tipped workers running roughly from $3 to $10 or more per hour. Where a state rate is higher than the federal rate, the state rate controls.7U.S. Department of Labor. State Minimum Wage Laws Check with your state’s wage and hour agency before assuming $2.13 is what you’re legally owed.