The math in one line
Minimum wage = cash wage + tip credit. Under federal law, $7.25 = $2.13 + $5.12 (DOL Fact Sheet #15). The $2.13 is what your employer pays you directly. The $5.12 is the part of the minimum it’s allowed to cover with your tips. It’s a ceiling, not a promise: the tip credit can never be more than the tips you actually received.
Your state can change both numbers. In 16 states the cash wage is still the federal $2.13; the rest pay more, up to $14.75 in Hawaii. And seven states don’t allow a tip credit at all: Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington. There you get the full minimum wage before tips. Every state is in the minimum wage table.
The check happens once a week
Federal law looks at the workweek, not the shift. If your cash wages plus your tips for the week don’t add up to the minimum wage for every hour you worked, your employer has to make up the difference (Fact Sheet #15). A good Friday covers a slow Monday in the same week. It never carries over to the next one.
- Cash wages32 h × $2.13
- $68.16
- TipsCash and card, after tip-out
- $120.00
- Wages plus tips
- $188.16
- Minimum for the week32 h × $7.25
- $232.00
Your employer adds$43.84
That top-up is the part of the minimum wage your tips didn’t cover, and it should show on your pay stub. Payroll systems name it differently: “tip credit make-up”, “min wage adjustment” and the like. If you have slow weeks and never see a line like that, go through your stub line by line.
What your employer owes in your state
The same slow week in four states: 32 hours, $120 in tips, paid the lowest cash wage each state allows.
| State | Cash wage | Wages + tips | Minimum for 32 h | Employer adds |
|---|---|---|---|---|
| Texas | $2.13 | $188.16 | $232.00 | $43.84 |
| Florida | $11.98 | $503.36 | $480.00 | $0.00 |
| New York (NYC area) | $11.35 | $483.20 | $544.00 | $60.80 |
| California | $16.90no tip credit | $660.80 | $540.80 | — |
In Florida, the cash wage is high enough that $120 in tips covers the gap. In New York City the cash wage is higher than in Texas, but so is the minimum, so the same week still leaves $60.80 for the employer to add. In California there’s no tip credit: you get $16.90 an hour before tips, and the tips are yours on top.
Try your own week in the tip credit calculator, with every state’s rates.
When your employer can’t take the tip credit
The tip credit comes with conditions. Before taking it, your employer has to tell you (Fact Sheet #15):
- the cash wage it pays you, at least $2.13 under federal law;
- how much it claims as a tip credit, no more than $5.12;
- that the tip credit can’t be more than the tips you actually get;
- that you keep all your tips, except what goes into a valid tip pool;
- that the tip credit doesn’t apply unless you’ve been told all this.
Without that notice, the tip credit doesn’t apply, and the full minimum wage is owed for your hours. Your tips have rules of their own: an employer that keeps part of them, or lets a manager into the pool, is breaking them. More on that in how tip-out works.
Side work and the tipped wage
Setting tables, toasting bread, making coffee, the occasional rack of dishes: the DOL lists duties like these as part of a server’s job, and they can be paid at the tipped wage. A separate job is different. If you also work a non-tipped job for the same employer, say maintenance, no tip credit can be taken for those hours (Fact Sheet #15).
For a few years a stricter federal rule capped side work at 20% of your hours, the “80/20 rule”. A federal appeals court struck it down in August 2024, and the DOL took it out of the regulations that December (Federal Register). Your state can still set its own limits, so check its labor department.