Under the FLSA, a tipped employee is an employee engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips. This Fact Sheet provides general information concerning the application of the FLSA to tipped employees, whether an employer pays the full minimum wage or takes a credit against the tips earned by the employee towards its minimum wage obligations.
Employers must provide the following information to tipped employees before taking a tip credit under the FLSA
• the amount of the direct (or cash) wage the employer is paying a tipped employee, which must be at least $2.13 per hour;
• the additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required direct
(or cash) wage of $2.13 and the current minimum wage of $7.25);
• that the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;
• that all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees
who customarily and regularly receive tips; and
• that the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.