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Workforce Management

Minimum Wage for Tipped Employees by State 2020

If employees regularly receive tips, complying with minimum wage regulations can be a complicated business—especially when calculating overtime. The reality is, the rules can be very different based on where you are in the country. If you’re running payroll for restaurants or hospitality you need to be informed of tipped minimum wage laws wherever you are.

What is a Tipped Employee?

In federal law, a tipped worker is anyone who regularly receives at least $30 per month in tips. However, Arkansas, Hawaii, Illinois, Massachusetts, Kansas, Kentucky, North Carolina and Texas set a lower requirements of $20 per month. Three states have a minimum higher than federal standards: South Dakota at $35, Vermont at $120 and Connecticut with minimum or $10 weekly (or $2 daily) for hotels and restaurants.

Alabama, Georgia, Louisiana, Mississippi, South Carolina and Tennessee have no state laws regarding minimum wage for tipped employees.

How Do Different States Calculate Tipped Minimum Wage?

The tipped minimum wage is the lowest amount an employee can earn per hour. This is comprised of a basic cash wage (which must be paid by an employer) plus a tip credit (which an employer can claim). Federal law sets the minimum basic cash wage at $2.13 per hour, but many states mandate a higher level. In some states, employers must pay tipped employees the full state minimum wage before tips.

To help your organization stay aware of the latest labor law, Paycor has created a breakdown of tipped minimum wage requirements by state for 2020.

State  Minimum Cash Wage  Maximum Tip Credit  Tipped Minimum Wage (Total) 
Federal  $2.13  $5.12  $7.25 
Alabama  $2.13  –  – 
Alaska  $10.19  –  $10.19 
Arizona  $9.00  $3.00  $12.00 
Arkansas  $2.63  $7.37  $10.00 
California1  $13.00 –  $13.00 
Colorado  $8.98  $3.02  $12.00 
Connecticut2  $6.38  $4.62  $11.00 
Delaware  $2.23  $7.02  $9.25 
Florida  $5.54  $3.02  $8.56 
Georgia  $2.13  –  – 
Hawaii3  $9.35  $0.75  $10.10 
Idaho  $3.35  $3.90 $7.25 
Illinois  $6.00  $4.00 $10.00 
Indiana  $2.13  $5.12 $7.25 
Iowa  $4.35 $2.90  $7.25 
Kansas  $2.13 $5.12  $7.25 
Kentucky  $2.13  $5.12  $7.25 
Louisiana  $2.13 –  – 
Maine  $6.00  $6.00  $12.00 
Maryland  $3.63  $7.37  $11.00 
Massachusetts  $4.95  $7.80 $12.75 
Michigan  $3.67  $5.98  $9.65 
Minnesota4  $10.00  –  $10.00 
Mississippi  $2.13  –  – 
Missouri  $4.73  $4.72  $9.45 
Montana5  $8.65  –  $8.65 
Nebraska5  $2.12  $5.12  $7.25 
Nevada6  $8.25  –  $8.25 
New Hampshire  $3.26  $3.99  $7.25 
New Jersey  $3.13  $7.87  $11.00 
New Mexico  $2.35  $6.65  $9.00 
New York7  $7.85  $3.95  $11.80 
North Carolina  $2.13  $5.12 $7.25 
North Dakota  $4.86  $2.39 $7.25 
Ohio8  $4.35  $4.35 $8.70 
Oklahoma9  $2.13  $5.12  $7.25 
Oregon  $11.25  –  $11.25 
Pennsylvania  $2.83  $4.42  $7.25 
Rhode Island  $3.89  $6.61  $10.50 
South Carolina  $2.13  –  – 
South Dakota  $4.65  $4.65  $9.30 
Tennessee  $2.13  –  – 
Texas  $2.13  $5.12  $7.25 
Utah  $2.13  $5.12  $7.25 
Vermont  $5.46  $5.46  $10.96 
Virginia  $2.13  $5.12  $7.25 
Washington  $13.50  –  $13.50 
West Virginia10  $2.13  $5.12  $7.25 
Wisconsin  $2.33  $4.92  $7.25 
Wyoming  $2.62  $6.13  $8.75 

¹ Small businesses (with fewer than 26 employees) have a lower rate of $12 per hour. For local minimum wage regulations, read our guide to California Minimum Wage

² Hotels and restaurants only. Bartenders have a higher minimum cash wage ($6.38) and so a lower tip credit ($2.77)

³ Tip Credit only applicable if the combined amount an employee receives from the employer and tips is at least $7.00 more than the minimum wage.

⁴ $8.15 for small employers (with gross revenue of less than $500,000)

⁵ $4.00 for businesses not covered by FLSA with gross annual sales of $110,000 or less

⁶ Minimum wage is $7.25 if employees receive health insurance benefits

⁷ For tipped food service workers. For tipped service employees, the basic cash wage is $9.85 and maximum tip credit $1.95

⁸ Applies only to employers with gross sales of $305,000 or higher

⁹ Basic cash wage is $2.00 for employers with gross annual sales of $100,000 or less and fewer than 10 full time employees at any one location

¹⁰ State minimum wage only applies to state agencies and private companies with 6+ employees

Paycor is not a legal, tax, benefit, accounting or investment advisor. All communication from Paycor should be confirmed by your company’s legal, tax, benefit, accounting or investment advisor before making any decisions.

How Paycor Helps

Paycor can help you stay compliant, wherever you are. Our intuitive and easy-to-use payroll software makes inaccuracies easy to catch and the entire process as effortless as possible.

To learn more about how Paycor can help you stay compliant, save time and make better business decisions, talk to a member of our team.