User:K. Kellogg-Smith

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K. Kellogg-Smith

(The following article is still being developed)

Tip wage credit

The Fair Labor Standards Act of 1938 ("FLSA" or "the Act") is a major United States labor law.  The Act establishes a minimum hourly wage, commonly called the "minimum wage", for workers covered by the Act.  The tip wage credit is a special employer benefit included as a provision in Section 3(m) of the Act. The special provision allows employers to pay tipped employees a cash wage that is substantially less than the Act's full minimum wage requirement.

Section 3(m) of the Act allows employers to pay tipped employees a small dollar amount of those employees' minimum wage in cash. ^{(called the "cash floor")}  For the rest of tipped employees' minimum wage, Section 3(m) allows employers to take credit for tipped employees' tips, and to use that credit as though it were actual cash wages paid by the employers.

The Act requires that tipped employees must receive the sum of the two wages — the Act's minimum hourly cash wage for tipped employees and the tip wage credit's pseudo hourly wage — and that the sum of the two must equal the Act's minimum hourly wage. By being allowed to take advantage of tipped employees' tips, employers are able pay tipped employees a relatively small cash wage but still meet the minimum hourly wage requirement of the Act.

Because the employers tip wage credit allowance affects both employers' wage costs and tipped employees' minimum wage entitlement, the tip wage credit has been, and still is, controversial. The tip credit has been the subject of continued lobbying and legislative action in Congress^{cite H.R. 5970, 109th Congress}as well as in many state legislatures.  While most states have adopted or incorporated similar tip credit provisions in varying degrees in their minimum wage laws, several states expressly prohibit the practice.

The tip wage credit

Often called simply the "tip credit", the tip wage credit provision was inserted into Section 3(m) of the Fair Labor Standards Act as an employer benefit.  When the 89th Congress (1966) amended the Act to include hotel, motel, and restaurant workers — many of whom customarily and regularly receive tips from customers — Congress added the provision to help compensate employers in those industries for their increased wage costs due to the FLSA's minimum wage requirements.^{(cite Whittaker's history)}  The original tip credit amendment of 1966 has remained in the Act virtually unchanged^{(cite 1998 $30 tipped employee bump up)} throughout subsequent sessions of Congress.

Although the Act requires that the combination of actual wage and the tip wage credit taken by employers must always equal the FLSA's minimum hourly wage, tipped employees usually receive less in employer-paid cash hourly wages than the minimum hourly wage stated in the Act.  Many tipped employees therefore erroneously believe that the minimum cash wage they are paid is the minimum wage, and will often tell customers that they are paid "minimum wage plus tips".  Exceptions occur when the combination of employer-paid cash wage and their tip wage credit payment is less than the FLSA minimum hourly wage.  When this occurs, employers are obligated in Section 3(m) to make a supplemental cash wage payment to the affected employees.  The supplemental cash wage payment must be enough to cause the cash wage plus hypothetical wage combination to equal the FLSA minimum hourly wage.

Employers are not obligated to use their Section 3(m) tip credit benefit to reduce tipped employees minimum wage entitlement.  Sections 3(m) and 3(t) are discretionary provisions which allow, but do not require, employers to reduce tipped employees' statutory minimum hourly wage.  However, employers who choose to pay their tipped employees the full statutory minimum wage, and not take advantage of their tip wage credit benefit, risk placing themselves at a significant competitive disadvantage as opposed to those employers who do take advantage of the benefit.

Other business functions that are affected by the tip credit are:

• payroll taxes employers have to pay on a tipped employee's minimum wage.
• baseline for amounts employers are allowed to claim for excess FICA payroll taxes.
• annual variations in the minimum cash wage employers are required to pay tipped employees when the minimum wage is indexed by cost of living or industry prevailing wage rates.
• IRS 45(B) tax credit on excess FICA taxes paid on over and above minimum cash wage plus tip credit.

Who are tipped employees?

Tipped employees are defined in section 3(t) of the Fair Labor Standards Act as employees who customarily and regularly receive more than US$30.00 a month in tips in the course of their employment.  Section 3(t) defines the term "month" as both calendar months and any other monthly period of time.

The phrase "customarily and regularly" is critical in classifying an employee as a tipped employee.  Employees who are not customarily tipped, but who do occasionally receive tips — such as delivery truck drivers who deliver furniture or other large merchandise from stores to customers' homes — cannot be classified as tipped employees by their employers.^{FLSA cite?}

As of the 2004 U.S. Census, there were over (?) occupations in the United States employing (?) employees whose minimum hourly wage was subject to being reduced by the tip wage credit provision of the FLSA or state wage and hour laws.

(This is a stub to segue into statistics on tipped employees in occupations other than the restaurant industry)There is some controversy about workers in occupations where tipping is a common, customary, and regularly performed practice, but where the 'employee' is not classified as a tipped employee.  For example, taxicab drivers are usually tipped as a matter of social custom.  But some taxicab drivers are independent contractors who lease their taxicabs from their taxicab company, pay for all operational expenses of the taxicab, and are in fact not actually paid employees of the taxicab companies through which they operate.

What are tips?

Tips are cash, bank checks, or other negotiable instruments payable at par, freely given by a customer to an employee. Cash received by employers from customers on credit and debit card receipts designated as amounts to be added to their bills as tips are also defined by the Act as being tips.^{set ref to FLSA § 531.53}

What are not tips?

Gratuities other than money or its equivalent are not considered as tips received by employees under the provisions of the FLSA. Theater tickets, passes and merchandise are other examples of non-cash gratuities that are not considered tips under the Act.^{set ref to FLSA § 531.53 and IRS sections}.

Directly tipped employees

Directly tipped employees are employees who receive tips directly from customers or from persons to whom they have provided a service of some kind. Common examples are baggage handlers such as porters and hotel bell hops, hotel housekeeprs, maids, and housemen, valet parking attendants, full service restaurant waitresses and waiters, limited service restaurant table attendants, and bartenders.

Indirectly tipped employees

Some employees, typically those employed in restaurants, are not tipped directly by customers, but instead receive cash for their services from directly tipped employees.  These cash payments, called tip outs, qualify the recipients as tipped employees under U.S. Department of Labor and U.S. Internal Revenue Service interpretations of the FLSA.  Bus boys, runners, service bartenders, and hostesses are some examples of indirectly tipped employees in the restaurant industry that can be classified as tipped employees by their employers.

Tip wage credit in state minimum wage laws

Most states that have written their own minimum wage laws.  Some states explicitly follow the minimum wage and tip credit provisions of the FLSA, while other states have established their own minimum wage and tip credit provisions.  Seven states ^{f.n.(Alaska, California, Nevada, Oregon, Minnesota, Montana and Washington)} do not allow employers to take a tip credit against tipped employees' minimum wage.  In states that allow employers to take a tip credit, the amount of the benefit varies from state to state.  Some states set the tip credit as a percentage of the state's minimum wage.  Other states set a minimum cash wage floor^{footnote % vs. $$} that must be paid to tipped employees, and set the employers' tip credit as the difference between the cash wage floor and the state's full statutory minimum wage.

States that allow tip credit

The range of tip credit allowances varies widely in states that allow employers to reduce tipped employees' minimum wage by taking credit for tips those employees receive. The state of Hawai'i, at th low end of the range, only allows employers to reduce their tipped employees' minimum wage entitlement by less that 5%. The state of Delaware, on the other hand, the highest in the range, allows employers take as much as two-thirds off a tipped employee's minimum wage entitlement through application of the tip credit.

Tables 2a and 2b are state by state compilations of states that permit employers to take credit for tipped employees' tips, and those states' tip credit allowances.  Table 2a lists states that limit the employers' tip credit benefit to less than 50% of tipped employees' minimum wage entitlement.  Table 2b lists states that allow tip credits of 50% or more of tipped employees' minimum wage entitlement.  The states are ranked highest to lowest according to their tip credit allowance.  Depending on a state's minimum wage legislation, the allowance is stated as either a percent or a dollar amount. The last column of the table gives the minimum cash wage employers are required to pay their tipped employees.

States that do not allow the tip credit

A few states specifically prohibit employers from reducing any employee's state-mandated minimum hourly wage by taking credit for any tips the employee receives, or have state labor laws which are silent on the subject. Whether these states specifically prohibit the tip credit or are silent on the subject, they result is that they do not allow the practice.

Table 1 shows which states which either prohibit or do not allow the taking of a tip credit to reduce tipped employees' statutory minimum hourly wage.

Arguments for and against the tip credit

Support for the tip credit

[statements require citations]

•  Businesses employing tipped employees have profit margins that are so narrow that if they had to pay the full statutory minimum wage their wage bill would be increased to a point where they could no longer stay in business,

•  Tipped employees make good money from tips; they make much more than the minimum wage,

•  Tipped employees receive their tips while working at employer-provided jobs, so it's realistic that their tip income should be treated like wages,

•  The average tipped employee receives considerably more than the statutory minimum wage in gratuities from guests, but it is the restaurant employer who makes the capital investments to create the environment in which tipped employees receive those gratuities. It is the owners and managers, not tipped employees, are ultimately responsible for restaurant guests having an enjoyable dining experience. It is the owners and managers who offer guests interesting, enticing, and well prepared appetizers, entrees, desserts, and meal accompaniments prepared by professionally certified chefs and cooks. It is the owners and managers who select and maintain the restaurant ambiance and decor, table settings and arrangements, lighting, furnishings and decorations, kitchen and wait staff selection and scheduling, and all other arrangements that allow restaurant guests to look forward to enjoying well-prepared meals in pleasant settings. Since it is the owners and employers whose costs provide the reason their guests come to their restaurant, and since restaurant owners' profit margins are low, they should be allowed to credit 100% of tipped employees tips against those employees' minimum wage,

•  The minimum wage provisions of the FLSA were enacted to make sure that minimally skilled hourly wage earners are paid a wage that is a reasonable percentage of the wages made by more skilled workers in industry. However, the tip income that the average tipped employee receives from restaurant guests is well over and above the statutory minimum wage. In fact, many tipped employees have hourly tip rates that exceed the hourly pay rate of skilled craftsmen and tradesmen. Therefore, a 100% tip rate or exemption from the minimum wage provisions of the FLSA would not be unreasonable for tipped employees who report average hourly tip incomes that are significantly more than the FLSA's minimum hourly wage.

•  Position of Senator Norm Coleman, representing the state of Minnesota in the United States Senate, on tip credit provisions in H.R.5970 (109th U.S. Congress).
•  Position of the Oregon Restaurant Association.
•  Position of the Washington Restaurant Association.
•  Arguments for and against the tip credit in Montana
•  Arguments for the tip credit, contained in Alaska Senate Labor and Commerce Minute, April 28, 2001
  regarding SB 46 and SB 132. See remarks by MR. JACK AMOUN, President, Alaska Restaurant and Beverage Association, and owner of Marx Brothers Cafe.

Opposition to the tip credit

[statements require citations]

•  "Tips, labor argued, are gratuities; they are irregular, often demeaning, and represent, in effect, a side arrangement between the server (or service worker of whatever sort) and the customer."
•  there is no justification whatsoever for reducing any employees' entitlement to receive their full statutory minimum wage entitlement,

•  the tip credit is discriminatory, affecting only a single class of wage earners while not affecting others,

•  tip income is variable and therefore is an unpredictable source of wages,

•  being assessed a tip credit against their statutory minimum wage entitlement is solely at the discretion of the employer, and may be taken without the consent of the employee,

•  employees have no recourse except to appeal to the state or federal government to redress errors and omissions in assessing them an incorrect tip credit by their employer,

•  the tip credit is de facto a wage subsidy paid to employers at the expense of their employees.

•  Position of the Minnesota AFL-CIO on tip credit provisions in House of Representatives bill H.R.5970 (109th U.S. Congress).
•  Position of the Oregon AFL-CIO
•  Position of the Washington State Labor Council
•  Arguments for and against the tip credit in Montana

•  Arguments against the tip credit, contained in Alaska Senate Labor and Commerce Minute, April 28, 2001
  regarding SB 46 and SB 132. See remarks in the Minute by the following:

COMMISSIONER ED FLANAGAN	Department of Labor and Workforce Development
MR. MARVIN JONES	President, Hotel and Restaurant Employees Union, Local 878
MR. JIM CALHOUN	Former employee, Sheraton Anchorage Hotel
MS. TORA GERRICK	Secretary/Treasurer,Hotel and Restaurant employees Union, Local 878
MS. FAY GAVIN	Employee, Sheraton Anchorage Hotel
MS. SUE BAILEY	Employee, Hotel Captain Cook Member, Local 878
MS. MARY JO AUDECTE	Part-time server, Sheraton Anchorage Hotel
MS. LUCY VINCENT	Employee, Sheraton Anchorage Hotel
MS. BERIT ERIKSSON	Inlandboatsmen's Union

The effect of tip credit allowances to changes in the minimum wage.

Minimum wage increases have been debated in Congress and in state legislatures, often without any consideration of the consequences of the increases on tipped employees.  In states having minimum wage cash floors that are not changed when minimum wage increases are approved, minimum wage increases are of little benefit to tipped employees.  In those states an increase in the minimum wage acts as an increase in employer' tip credit benefit, since the difference between the cash floor and the new minimum wage is passed on to employers as an inrease in the employers' tip wage credit.

In states where the minimum cash floor is adjusted upward in step with the increase in the minimum wage, tipped employees realize an actual increase in their base wage while their employers tip credit percent generally remains unchanged.  These two conditions are also affected by whether minimum wages are legislatively defined and static, or indexed by being linked to the Consumer Price Index or equivalent living cost index, or linked to an index of average wages in manufacturing or other wage index.

Indexed versus legislated minimum wage

[stub: Ref W.G. Whittaker's monograph "Possible Indexation fo the Federal Minimum Wage: Evolution of a Legislative Activity" less for arguments pro/con, more for impact on employers/employees, if possible. Some states index their minimum wage increases, e.g., Oregon and Washington. -- Ed.]

Effect on employees' cash wages

Except for the states that prohibit employers from taking a tip credit allowance, the minimum wage has two components: (1) the minimum cash wage that employers are required by state or federal law to pay tipped employees, and (2) the employers' tip credit allowance, which permits employers to deduct tipped employees' tip income from their minimum wage. Employers are required to make up the difference between a tipped employee's minimum cash wage and the prevailing state minimum wage only when the tipped employee's average hourly tip income is less than their employers' maximum tip credit allowance.

Table 3 is a summary of the effect on tipped employees of the employers' tip credit allowance on the minimum wage increases approved by states in November, and which took effect as of January 1, 2007.

The remaining 14 of the 22 states that increased their minimum wage in 2007 allow their states' employers to deduct anywhere from 35 percent to as much as 66 percent of a tipped employee's minimum wage as the employers' tip credit allowance.

Some state legislatures effectively cancel out minimum wage increases to tipped employees by increasing the employers tip credit allowance by an amount equal to the employees' minimum cash wage increase.

Effective January 1, 2007, Arizona increased the state minimum wage, but cut tipped employees' minimum cash wage by almost half of what they received in 2006 by permitting a tip wage credit fo 44.4%.

The employers tip credit allowance is a de facto wage subsidy paid to employers, a subsidy paid out of wait servers' tip income. Industries employing tipped employees are the only industries in the United States where employees are legally required, without their consent, to directly subsidize their employers' wage costs.

Effect on employers' wage costs

Prior to 1998 the tip wage credit was defined in the FLSA as being 50% of the minimum hourly wage specified by the Act. [Expand this re previous amendments changing the tip wage credit value. -- Ed.] In 1998 the 100th[?] Congress amended the Act to make the tip wage credit the difference between the full statutory minimum hourly wage and the minimum cash wage employers were required to pay to tipped employees.

The statutory minimum hourly wage at the time the amendments were made was $4.25 an hour, the minimum cash wage was US$2.125 an hour. Instead of stating the tip wage credit as a percentage of the full minimum hourly wage, as had been done since the inception of the tip wage credit in 1966, the new tip wage credit was established as the difference of the full statutory minimum hourly wage less the minimum cash wage employers were allowed to pay tipped employees.

At the time the Act was amended the new definition of the tip wage credit resulted in a tip wage credit of 50% of the minimum hourly wage specified by the Act. When the minimum hourly wage was raised by Congress in successive years, the minimum cash wage was left at US$2.125. As a result, the employers' tip wage credit as a percent of the minimum hourly wage dropped from 50% in 199[?]to 41.4% in 1998 when Congress increased the minimum wage to US$5.15 an hour.

As a result of Congress not increasing the minimum cash wage required by the Act, employers of tipped employees experienced a nearly 9% increase in their cash wage cost instead of having a tip wage credit that increased their tip wage credit benefit by US$0.45 an hour.

As long as the minimum hourly cash wage remains constant at US$2.125 an hour, successive increases in the national minimum hourly wage will continue to reduce the dollar amount of the employers tip wage credit benefit, and increase the probability that an employer will have to pay a tipped employee a supplemental wage payment to bring the employee's average hourly wage up to the national minimum hourly wage.

Additional effects of the tip wage credit

The tip wage credit has to be considered in other aspects of the payment of wages to tipped employees. For example, tip credit provisions in federal and state minimum wage laws that allow employers to include the cost of non-cash employee benefits, such as discounted meals for restaurant employees, as part of the employers' tip credit, can sometimes result in employees receiving null or zero paychecks.  The cost to tipped employees of sharing their tips with other employees through tip pooling agreements is a tax deductable expense to the employee, but can significantly reduce tipped employees' take home pay.

On the employer's side, employers who overpay FICA/FUTA payroll taxes on tipped employees' income can recover the overpayments, but can only recover taxes paid on tip income over and above the full statutory minimum wage, even though payroll taxes, but no actual cash wages, were paid by the employer on the full or partial tip credit allowance the employer used.

Zero or null paychecks

[stub?: Discuss how psuedo wage created by tip wage credit is taxable income (state as well as federal) due to the pseudo wage being tip income received by employee. Employees pay taxes on sum of reported tip income and minimum cash wages received for the payroll period. If an employee's tip income (reported or actual) is below the employer's tip rate threshold (e.g. 8 percent), the employer will allocate (add) additional taxable tip income to the employee's reported tip income, and withhold applicable federal and state taxes accordingly. The effect of adding allocated tips and withholding taxes due on the allocation often results in the employee not enough earned income for the period, and receiving a "zero" or "null" paycheck as a result. -- Ed.]

Tip pooling agreements

[stub: Will cover tip wage credit as it affects monies in voluntary or mandated tip pooling agreements, i.e., employees' tips used by employers as tip wage credit cannot be used as contributions to valid and mutually agreed upon tip pooling agreements. -- Ed.]

Voluntary tip pooling

[stub: Description to go here. -- Ed.]

Mandatory tip pooling

[stub: Description to go here. -- Ed.]

Employers 45(B) excess FICA tax credit

[stub: The 45(B) tax credit available to employers who have overpaid Federal Insurance Contriubutions Act ("FICA") payroll taxes on employees' tip income is often confused with the FLSA tip wage credit provision. This section describes how FLSA tip wage credit allowances taken by employers must be taken into consideration when employers take the FICA tax credit. -- Ed.]

Applicabilty and penalties for tip wage credit violations

[stub: Applicability and cited court cases involving minimum wage violations centered on the use/misuse of the tip wage credit provisions. -- Ed.]

Tip credit and 14th Amendment's protections in the U.S. Constitution

[stub: Short discussion about the impact of the tip wage credit on food service employees, almost three-quarters of whom are women. Can it be construed that a federal or state law that takes away the rights to a full minimum wage of workers in an occupation where the work is performed predominately by women, and where that right is taken without the consent of those employees, is contrary to the equal protection clauses of the Constitution of the United States? -- Ed.]

Legislative history of the tip wage credit

Main article: History of the tip credit

•  The 75th Congress approved the "Fair Labor Standards Act of 1938" on June 25th, 1938, as Chapter 327, 52 United States Statutes at Large ("Stat.") 631, and incorporated into the United States Code in Title 29, "Labor", at §201 et sequentia.  When the Act was approved by Congress, authority to interpret and administer the Act was given to the Secretary, U.S. Department of Labor in 52 Stat.1061, Chapter 676, §4.  Consequently, it is the Department of Labor that interprets, administers and enforces the tip wage credit provisions of the FLSA.

The Department's interpretation of the FLSA and its administrative rules and regulations are are incorporated in the United States Code of Federal Regulations ("CFR") in Title 29, "Labor".  Changes to the Department's administrative rules and regulations are published in the Federal Register and incorporated into the CFR.  The Department's legal opinion letters and its Field Operations Handbook are the Department's operating guidelines with respect to employers and tipped employees alike. However, when the Department's rules or regulations are contested it is the federal courts that make the final determinations as to the interpretation and administration of the FLSA's provisions.

•  The 89th Congress amended the Act in 1966 to include coverage for hotel, motel, and restaurant workers.  Congress defined tipped employees in Section 3(t) and added the tip wage credit in Section 3(m) in its 1966 amendments the Act to help compensate employers for the increase in wage costs of the newly covered workers, many of whom received supplementary incomes from the gratuities given to them by customers, .

Relevant statutes and codes

State labor laws in re minimum wage, tipped employees, and tip credit.

Alabama	Alaska	Arizona	Arkansas	California
Colorado	Connecticut	Delaware	District of Columbia	Florida
Georgia	Hawai'i	Idaho	Illinois	Indiana
Iowa	Kansas	Kentucky	Louisiana	Maine
Maryland	Massachusetts	Michigan	Minnesota	Mississippi
Missouri	Montana	Nebraska	Nevada	New Hampshire
New Jersey	New Mexico	New York	North Carolina	North Dakota
Ohio	Oklahoma	Oregon	Pennsylvania	Rhode Island
South Carolina	South Dakota	Tennessee	Texas	Utah
Vermont	Virginia	Washington	West Virginia	Wisconsin
		Wyoming

The Fair Labor Standards Act.

Fair Labor Standards Act of 1938, (as amended)

Relevant sections in Title 29 of the United States Code, "Labor".

Title 29, "Labor", United States Code, Chapter 8, § 203. Definitions

Selected sections from Title 29 of the Code of Federal Regulations, "Labor".

Title 29, "Labor", Part 531 — WAGE PAYMENTS UNDER THE FAIR LABOR STANDARDS ACT OF 1938"

§531.27   Payment in cash or its equivalent required    [1]

§531.50   Statutory provisions with respect to tipped employees    [2]

§531.51   Conditions for taking tip credits in making wage payments   [3]

§531.52   General characteristics of "tips"    [4]

§531.53   Payments which constitute tips    [5]

§531.54   Tip pooling    [6]

§531.55   Examples of amounts not received as tips    [7]

§531.56   "More than $20 a month in tips"    [8]

§531.57   Receiving the minimum amount "customarily and regularly"    [9]

§531.58   Initial and terminal months    [10]

§531.59   The tip wage credit    [11]

Tables

Table 1:   States where tip credit is not allowed.

State	2007 minimum wage	Tip wage credit maximum percent	Minimum cash wage paid to employee
Nevada	$6.15	not allowed	$6.15
Montana	$6.15 [1]	not allowed	$6.15
Minnesota	$6.15 [2]	prohibited	$6.15
Alaska	$7.15	prohibited	$7.15
California	$7.50	prohibited	$7.50
Oregon	$7.80	prohibited	$7.80
Washington	$7.93	prohibited	$7.93

1.  For employers with gross annual sales of more than $110,000; otherwise $4.00 an hour.

2.  For employers with gross receipts of $500,00 or more; otherwise, $5.25 an hour.

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Table 2(a):   States where tip wage credit allowances are 50% or less of statutory minimum wage.

State	2007 minimum wage	Tip wage credit maximum percent	Minimum cash wage paid to employee
Oklahoma	$5.15	50.0 [1]	$2.575
Maryland	$6.15	50.0	$3.075
Missouri	$6.50	50.0	$3.25
Ohio	$6.85	50.0 [1]	$3.425 [2]
Maine	$6.75 [3]	50.0	$3.50
Florida	$6.67	45.3	$3.65
New Hampshire	$5.15	45.0	$2.83
Arizona	$6.75	44.4	$3.75
Colorado	$6.85	44.1 [1]	$3.83
Illinois	$6.50	40.0	$3.90
Iowa	$5.15	40.0	$3.09
New York	$7.15	35.7	$4.60
Idaho	$5.15	35.0	$3.35
North Dakota	$5.15	33.0	$3.45
Connecticut	$7.65	29.3	$5.41
West Virginia	$6.55	17.7	$5.38
Hawai'i	$7.25	0.40	$7.00

1.  Employers are also allowed to credit non-cash benefits such as food and lodging against tipped      employees' minimum wage.

2.  $2.01 an hour is the minimum cash wage for employers with gross annual sales of $500,000      or less.

3.  The state minimum wage increases to $7.00 effective October 1, 2007.

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Table 2(b):   States where tip wage credit allowances are more than 50% of statutory minimum wage.

State	2007 minimum wage	Tip wage credit maximum percent	Minimum cash wage paid to employee
New Jersey	$7.15	70.2 [1]	$2.13
Delaware	$6.65	66.5	$2.23
North Carolina	$6.15	65.4 [2]	$2.13
Massachusetts	$7.50	64.9	$2.63
Wisconsin	$6.50	64.2	$2.33
New Mexico	$5.60	62.0	$2.13
Michigan	$6.95	61.9	$2.65
Rhode Island	$7.40	60.9	$2.89
Alabama [3]	$5.15	58.6	$2.13
Louisiana [3]	$5.15	58.6	$2.13
Mississippi [3]	$5.15	58.6	$2.13
South Carolina [3]	$5.15	58.6	$2.13
Tennessee [3]	$5.15	58.6	$2.13
Wyoming	$5.15	58.6	$2.13
Virginia [4]	$5.15	58.6	$2.13
Utah	$5.15	58.6	$2.13
Texas	$5.15	58.6	$2.13
South Dakota	$5.15	58.6 [1]	$2.13
Nebraska	$5.15	58.6	$2.13
Kentucky	$5.15	58.6	$2.13
Kansas	$5.15 [5]	58.6	$2.13
Indiana [4]	$5.15	58.6	$2.13
Georgia [3]	$5.15	58.6	$2.13
Arkansas	$6.25	58.0	$2.625 [6]
Pennsylvania	$6.25	54.7 [1]	$2.83
Vermont	$7.53 [7]	51.5	$3.65

1.  Employers are allowed to credit non-cash benefits such as food and lodging against tipped      employees' minimum wage.

2.  Tip credit is not allowed unless an employer obtains from the employee a signed certification      of the amount of tips received each month or pay period.

3.  State has no minimum wage law.  Tipped employees are covered by provisions of the Fair Labor Standards Act.

4.  State law cites Fair Labor Standards Act for minimum wage.

5.  Under annotated Kansas statutes (K.S.A.), tipped employees minimum wage is determined by provisions of 29 U.S.C. §206.

6.  State statutue specifies 58% of minimum wage as tip credit, and 42% as minimum cash wage to tipped employees.

7.  $7.53 is the minimum wage for tipped employees, $6.25 an hour is the minimum wage for      all other employees.

Footnotes

References

See also

• credit
• minimum wage
• wage and hour laws

(Terms to be linked to or from this article)

• tip credit (also from Wikipedia)
• employers tip credit
• maximum tip credit
• minimum cash wage
• minimum hourly cash wage
• minimum wage tip credit

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