Do Tips Make Up for Minimum Wage in Ohio?

Tipped employees, just like other types of employees, must be paid according to federal and state guidelines. The federal government has a set required minimum wage for workers who regularly receive tips.

By the U.S. Department of Labor’s definition, a tipped employee is anyone  who “engages in an occupation in which he or she customarily and regularly receives more than $30 per month in tips.” The federal minimum wage that employers of tipped employees are required to pay is $2.13 per hour “in direct wages if that amount combined with the tips received at least equals the federal minimum wage.”

For tipped employees, there may be a range of questions you have about the minimum wage for tipped employees. Common questions include whether tips make up for the minimum wage for tipped employees and what minimum wage you should be receiving. Do tipped employees get overtime?

Below, we answer some of these questions about the minimum wage for tipped employees.

Disclaimer: The following is not legal advice; it is general information meant to inform. Please consult a minimum wage attorney for legal advice and guidance.

What is the Current Minimum Wage for Tipped Employees?

The current minimum wage for tipped employees at the federal level is $2.13 an hour in direct wages if that amount plus their earned tips equals the federal minimum wage of $7.25 an hour.

It is important to note that according to the Department of Labor, a tipped employee’s tips with the addition of an employer’s direct wages of at least $2.13 must equal at least the current federal minimum wage of $7.25.

Individual states may also have their minimum wage for tipped employees. In Ohio, the minimum wage for tipped employees (as of 2023) is $5.05 per hour plus tips.

In cases where the state minimum wage is more than the federal minimum wage, an employer will need to pay the state minimum wage for tipped employees. The state minimum wage might differ based on the state you are in, and some states may even require that tipped employees be paid the full state minimum wage before tips are even factored in.

Do My Tips Make Up for Minimum Wage?

Tips effectively work to ensure that tipped employees receive the minimum wage that is required – either by state or federal law. Tip credit provision is key here.

The tip credit provision (sometimes called the tip credit allowance) is essentially the amount that an employer does not need to pay. So if we look at the federal minimum wage for tipped employees of $2.13, the tip credit here is $5.12. These two amounts equal the federal minimum wage rate of $7.25.

So with the tip credit provision, an employer is required to pay at least $2.13 an hour to a tipped employee. But if that employee does not receive enough tips to make up that $5.12 tip credit against the federal minimum wage, the employer is required to pay the difference.

This addition means that an employer is complying with the Fair Labor Standards Act (FLSA), which contains the provisions for the federal minimum wage.

If you believe you are not receiving the correct minimum wage for tipped employees, consider consulting with an Ohio minimum wage attorney. They will be able to provide expert insight into your situation and offer you advice on how to proceed.

What Minimum Wage Should I Be Receiving?

Based on federal law, a tipped employee should be receiving a higher rate of minimum wage for tipped employees out of two options: the federal minimum wage and the state minimum wage.

For example, states and U.S. territories like Ohio, the Virgin Islands, Florida, and Colorado all have a state-level minimum wage for tipped employees that is higher than the federal minimum wage. So tipped employees in those locations should be receiving their state or territory-set minimum wage. What happens if you get paid under minimum wage?

If you are a tipped employee who may be facing minimum wage violations, please contact a minimum wage attorney. They can provide additional insight into your situation and offer you legal guidance and representation.

The Friedmann Firm, LLC is a Columbus, Ohio-based employment and labor law firm. The minimum wage attorneys at the Friedmann Firm fight to ensure that all employees are treated fairly in the workplace. With years of experience handling employment cases that range from discrimination and harassment to wage and hour violations, The Friedmann Firm represents clients throughout Ohio. They bring an aggressive and compassionate approach to each case they take on. They offer free and confidential initial consultations that can be scheduled over the phone or online.