Apply the Minimum Wage Tip Credit

Key Points

  • Employers of employees such as wait staff, bartenders and bellhops who customarily and regularly receive tips may apply those tips as a credit against their minimum wage obligations under the Fair Labor Standards Act (FLSA) and under many state laws. However, certain states prohibit this practice.
  • Before applying the tip credit, employers must notify employees about how the tip credit works.
  • Employers that take advantage of the tip credit must also fulfill additional recordkeeping requirements.

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