What is the Alaska Minimum Wage For Tipped Employees?

In the United States, employment laws, and more specifically, minimum wage laws are not always clear to follow, especially when you are considering the minimum wage for tipped employees.

While tipping is perhaps not common practice in other countries, thousands of U.S. workers make the majority of their income through earning tips.

Employees in the U.S. that are employed by bars, restaurants, hotels, airports, and other service providers often expect to be paid a rather small hourly wage, which is then supplemented heavily by tips, which is also known as gratuities or tip credit.

However, this is not the case in Alaska due to there not being any ‘tip credit’ paid to employees within the state, meaning that, despite tips, employees will be paid the true Alaska minimum hourly wage.

What is a Tipped Employee in Alaska?

What exactly is a tipped employee? A tipped employee is one that earns their wages through tips rather than a fixed salary or higher hourly rate. Federal law establishes the rules of what is considered a tipped employee vs. a non-tipped employee.

The tipped minimum wage in Alaska works differently than most other states and there is only a handful of other states that do not use tip credit either.

The majority of states define a tipped employee as an employee that receives more than $30 per month in tips, or in some cases more than $20 per month in tips.

Whereas the tipped minimum wage in Alaska is simply the state minimum wage of $10.85 per hour.

Alaska Tipped Minimum Wage and Tipped Employees

Complying with the Alaska minimum wage law means employers must ensure that their employees are being paid an hourly rate of the state minimum wage regardless of tips.

Typically, employers would pay their employees a small hourly rate and then supplement that with a tip credit that equates to the state minimum wage, but not in Alaska.

Despite the tipped minimum wage system being different in Alaska to the majority of other states, the end result is still the same – tipped employees will be paid a total of the state minimum wage ($10.85 per hour) regardless of not receiving tip credit or a tipped minimum wage rate.

This is why having a general understanding of the minimum wage in Alaska is so important.

The Alaska minimum wage is currently $10.85 per hour for non-tipped and tipped employees.

Due to there being no tipped minimum wage and no tip credit in Alaska, despite how much an employee makes in tips, the minimum hourly rate they must be paid is $10.85 per hour.

Alaska law requires the Department of Labor and Workforce Development in Alaska to calculate minimum wage increases each year.

The annual calculation is based on the percentage increase in the Federal Consumer Price Index (CPI) for the previous 12-month period within the state.

The CPI is calculated based on what consumers pay for goods – a 1% increase in the regional CPI translates to a 1% increase in the applicable minimum wage in Alaska.

The minimum wage for both tipped and non-tipped employees rises based on the CPI.

Fair Labor Standards Act (FLSA) and Tipped Employees

The Federal Fair Labor Standards Act, also known as the FLSA, is a federal law from the U.S. Department of Labor.

This law establishes a national minimum wage, defines classifications for employees, and covers other essential standards and requirements for employers.

Due to the unique set of rules regarding the tipped minimum wage in Alaska, there is no such thing as tip credits in the state.

So, the tipped minimum wage in Alaska and the statewide minimum wage in Alaska are the same – $10.85 per hour.

This minimum wage rate ensures that servers, hospitality, and others in tipped roles in Alaska can still earn a regular and consistent weekly wage when working full-time at $434.00 (40 hours x $10.85 per hour).

Alaska Tipped Minimum Wage History Table

The minimum wage in Alaska for tipped employees has been improving almost year on year, much the same as the regular minimum wage.

Below is a historical table that you can use as a reference for the tipped minimum wage in Alaska over the years.

What Does This Mean for My Business?

If you currently operate, or are planning on starting a new business in Alaska, or are considering Alaska as your new home and are seeking a service and tip-driven job, or even a non-tipped job that you might be paid the minimum wage, you should certainly take this information about Alaska tipped minimum wage into account.

While you may want to speak with an employment attorney or accounting firm for legal and tax advice about your business, understanding the minimum wage laws for tipped and regular employees can help you make an informed decision.

What Does This Mean For Tipped Employees (Servers) in Alaska?

A fantastic example of an employee who earns tips in Alaska would be a restaurant server.

Servers are those who provide and serve their customers with food and beverages in a restaurant or similar type of business where food and drinks are brought to the table.

And as part of this service, a server will typically receive tips (gratuities) for doing so. Alaska servers usually rely less on their hourly wage and more on the generosity of guests.

Here is what you can make as an Alaska server on the tipped minimum wage in Alaska:

• Weekly Server Minimum Wage: $434.00 (based on a 40-hour week).
• Monthly Server Minimum Wage: $1,736 (based on a 160-hour month).
• Yearly Server Minimum Wage: $22,568 (based on being paid 52 weeks per year).

Below is a graphical representation of your potential earnings as a tipped server employee in Alaska – you can download this image and use it for future reference:

Average Server Salary in Alaska for 2023

We have covered the tipped minimum wage that an employer must pay a tipped server employee in Alaska. However, what we have not discussed is the average that servers get paid in Alaska.

If you are a server or are looking to work as a server in a restaurant or similar business in Alaska, knowing the hourly wage for servers is important, but knowing what you can expect to earn is even more important.

Realistically, most Alaska servers are not going to take a position at a restaurant with the view that they can only earn $10.85 per hour. They will be looking to earn more and get the most out of their job, financially speaking.

So, the average server hourly wage in Alaska (according to the job website Indeed.com) is $17.54 per hour! If you were to work an 8-hour shift or a total of 8 hours in a day across a couple of shifts, you could earn (on average) about $140.32 (8 hrs x $17.54).

This is far more lucrative than the standard tipped minimum wage rate in Alaska, but you must bear in mind that it is just an average. Some employers will pay more but some will pay less.

It typically depends on how good you are at your job and what kind of restaurant or food service place you are working at.

For example, if you are a server-tipped employee in a fine dining restaurant serving expensive food, you can expect to be paid more than if you worked for a more casual place, serving less lucrative meals.

Final Thoughts and Alaska Department of Labor and Workforce Development Contact Details

Perhaps the most important takeaway from this is that, as an Alaska employer, it is your responsibility to pay your tipped employees a minimum hourly rate that equals or surpasses the Alaska minimum wage.

Failing to do so will be breaking federal and state laws. Equally, it is important that as a tipped employee working in Alaska, you know your rights and how much you should be paid.

If you have a question or concern over the tipped minimum wage in Alaska you can contact the Labor Standards and Safety department for more information. They also have an FAQ document that you will find useful.

Provided below is also the contact information and address for the Alaska Department of Labor and Workforce Development:

Telephone: (907) 269-4955 / 1-800-770-4940
Email: FLC@alcc.alabama.gov
Address: Department of Labor & Workforce Development
P.O. Box 111149
Juneau, AK 99811