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.
- The OT differential for minimum wage is $3.63. The calculation: $7.25 (minimum wage) x .5 = $3.63.
- 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)!