How to Calculate Overtime for Tipped Employees

August 28, 2018

Overtime for tipped employees is based on the overtime rate for minimum wage.

Sharpen those pencils!¬†Calculating overtime (OT) for your tipped employees isn’t too complicated, once you have these two important facts under your belt.

  1. The OT differential for minimum wage is $3.63. The calculation: $7.25 (minimum wage) x .5 = $3.63.
  2. The tipped wage OT rate is $6.46. The math: $2.83 (tipped wage rate) + $3.63 (OT differential) = $6.46.

Here’s an example of how it works: Sharon worked 40 regular hours and 15 OT hours during this work week. Her pay is $210.10. Check out the calculation:

55 hours@ $2.83 (tipped wage rate) = $155.65

15 hours@ $3.63 (OT differential) = $54.45

$155.65 + $54.45 = $210.10

And for extra credit, the OT rate for minimum wage is $10.88 ($7.25 + $3.63)!