by U.S. federal law, the
minimum wage requirement does not necessarily include tips unless specific conditions are met. Here's how it works:
Federal Law (Fair Labor Standards Act - FLSA):
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The federal minimum wage is $7.25/hour.
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For tipped employees, employers can pay a lower "cash wage" of $2.13/hour if:
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The employee earns at least $30/month in tips, and
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The employee's tips + cash wage = at least $7.25/hour.
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If total earnings (wage + tips) do not equal $7.25/hour, the employer must make up the difference.
? State Laws May Differ:
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Many states set higher minimum wages and have stricter rules.
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Some states (like California, Oregon, Washington) do not allow tip credits at all — employers must pay the full state minimum wage before tips.
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Others (like Texas or Georgia) follow the federal standard.
Example:
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A restaurant server in Texas earns:
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$2.13/hour (cash wage)
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$5.50/hour in tips (on average)
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Total = $7.63/hour → Meets federal minimum
If they only made $4 in tips/hour, employer must add $1.12 to meet $7.25 → Otherwise, it’s a wage violation.
