Servers, bartenders, and bussers do not have a separate “tipped minimum” that replaces $7.25. The Fair Labor Standards Act still uses the $7.25 federal floor. What changes is who puts the money on the check: the employer may pay $2.13 an hour in cash and count tips you actually received toward the rest — up to $5.12 an hour. If the week still falls short, the employer writes the difference.
Run the federal tip credit calculator →
That make-up rule is the search people type when a slow Tuesday wrecks the week. It is also the sentence the Department of Labor prints in Fact Sheet #15.
Cash $2.13/hour, 40 hours, tips $100 → cash $85.20 + tips $100 = $185.20. Floor = 40 × $7.25 = $290. Makeup = $104.80.
The federal formula (one employer, one workweek)
floor = hours × $7.25
maximum credit per hour = $7.25 − cash wage (max $5.12 when cash is $2.13)
makeup = max(0, floor − cash wages − tips actually received)
A tipped employee, in the DOL’s words, is someone who customarily and regularly receives more than $30 a month in tips. Only tips you received count. The employer cannot invent a $5.12 credit on a night you took home $20.
The minimum-wage FAQ repeats the same arithmetic: pay at least $2.13 in direct wages if that amount plus tips equals the federal minimum; otherwise make up the difference.
Weeks you can re-run in the calculator
| Cash wage | Hours | Tips | Makeup | Week total |
|---|---|---|---|---|
| $2.13 | 40 | $100.00 | $104.80 | $290.00 |
| $2.13 | 40 | $204.80 | $0 | $290.00 |
| $2.13 | 40 | $250.00 | $0 | $335.20 |
| $5.00 | 40 | $80.00 | $10.00 | $290.00 |
| $7.25 | 40 | $0 | $0 | $290.00 |
The $250 week is the one people confuse with “the employer keeps $5.12.” They do not. You keep the extra tips. The credit is only the slice that can replace cash on the check, and it stops at $5.12 when the cash wage is $2.13.
What this is not
The federal minimum wage tool multiplies hours × $7.25 and does not model tips. Hours over 40 are a different statute — use the FLSA overtime calculator. FICA still applies to cash wages and to the taxable tip amount you report; estimate that line with the FICA calculator.
This explainer is federal. California, Oregon, Washington and several other states require the full state minimum before tips. When state law is more protective, that rule wins. Fact Sheet #15 says so in the “Interaction with State Laws” section.
A compulsory service charge (the 18% the restaurant adds for a party of six) is not a tip. DOL treats it as wages. Dual jobs and tip-pool math are also out of this page: if you spend half the shift as a janitor, the tip credit does not cover those hours.
Rates above are the federal figures DOL still publishes: $7.25 since 24 July 2009, $2.13 cash floor, $5.12 maximum credit. Confirm your state labor office and your stub before you act.
Official sources
- DOL Fact Sheet #15 — Tipped employees under the FLSA
- DOL — Questions and answers about the minimum wage
Open the tip credit calculator and change the tips until the makeup line hits zero. That is the week the federal floor is already met.