Minimum Wage Laws on Waitresses

Although the federal government controls the minimum wage, each state has a different way of requiring employers to pay employees that receive tips. Some states have no requirements on tips and the minimum wage is not determined by the tip amount that a waitress would make. However, there is a minimum on the minimum wage and a maximum on how much of the tips can be used as pay.

Minimum Pay

The minimum wage for a waitress is $7.25. The maximum tip money that can be used toward wages per hour is $5.12. The minimum wage that an employer can pay a tipped employee is $2.13. However, a tipped employee must make more than $30 per month to be considered a tipped worker and paid according to a tipped employee standard, which is the minimum pay allowed before tips.

How Tip Pay Works

If a waitress makes an average of $10 an hour in tips, he or she would report the total amount for the day to the employer. The employer can only use $5.12 per hour of that money toward the pay of the employee. The employer will pay the employee the minimum $2.13 per hour and record $5.12 that is subtracted from the $10 in tips per hour. The employee will have $4.88 of unclaimed tips.

Tip Pay and Minimum Wage By State

Besides the federal laws regarding minimum wages for waitresses, each state has its own standards. Some states do not allow tip credits, which means that tips are not included in the minimum pay, while other states do allow the tip credit. New Mexico has a lower rate for tipped waitresses than for non-tipped waitresses. For a table of your particular state, see www.dol.gov/esa/whd/state/tipped.htm.

Tax Requirements

All tips reported to the employer are subject to tax. Most employees will record the daily tips of each employee and report those tips on a W-2. Some employers will not report the tips and rely on the employee to report all tips on his or her income tax return. It is important to keep a daily log of all tips received daily for tax purposes.

Warning

If you make unreported tips and fail to claim those tips on a tax return, the Internal Revenue Service could audit your tax return and question your employer as to whether or not you worked as a tipped earner for the company. Even though the employer does not record those tips, you still must claim them as wages.

References

• United States Department of Labor
• IRS Publication 531-Reporting Tip Income