Tip Credit and Your Minimum Wage Obligation

August 28, 2018


The FLSA allows you to take a tip credit toward your minimum wage obligation for tipped employees.

That’s right. You can take a tip credit of $4.42 — the difference between the required cash wage ($2.83 in Pennsylvania) and the federal minimum wage (which is currently $7.25). Here’s another way of looking at it:

$7.25 (Federal Minimum Wage)

2.83 (Minimum PA Cash Wage)

$4.42 (Maximum Tip Credit Against Minimum Wage)

Remember, a tipped employee is one who receives more than $30 in tips monthly.

Have operations in other states? You can find state-specific information here.