The employment laws and minimum wage laws in the U.S. are not always clear, especially when considering pay for tipped employees. While tipping is not common in many other countries, many workers in the U.S. make most of their income through tips. Workers at restaurants, bars, and other service providers often expect to be paid a relatively small hourly wage supplemented heavily by tips (also known as gratuities). Many service-industry workers base their entire pay on tips and rely on them to cover their living expenses.
What is a Tipped Employee?
First of all, 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. If an employee receives more than $30 per month in tips, they are considered a tipped employee by federal standards. These employees often include workers such as bartenders, servers in Florida restaurants, certain hotel workers, and others. The Florida laws surrounding the definition of a tipped employee follow the federal guidelines.
Tipped Employees and the Tipped Minimum Wage in Florida
To comply with minimum wage laws, employers must ensure that when including tips, their employees are being paid at least the state minimum wage rate set for Florida tipped workers, also known as the Tipped Employee Minimum Wage for Florida. If those employees are not making that minimum pay rate, it is then the employer’s responsibility to make up the difference.
There are several different components of employment law that impact how Florida employers handle tipped employees. Understanding the minimum wage in Florida, the federal laws controlling wages, and how pay and wages work for tipped employees is important if you are thinking about starting a service-related business with tipped employees.
The minimum wage in Florida is currently $11.00 per hour for non-tipped employees. The tipped minimum wage is $7.98 per hour for tipped employees in Florida. Florida law requires the Florida Department of Economic Opportunity to calculate a minimum wage increase each year. The annual calculation is based on the percentage increase in the federal Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers in the South Region for the previous 12-month period from when the calculation occurs.
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 Florida. The minimum wage for both tipped and non-tipped employees rises based on the CPI. You can learn more about the Florida minimum wage here.
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. Federal law requires that employers make tipped employees aware of the cash wage paid (currently, the national direct hourly salary is $2.13 per hour), let them know about the tip credit, and explain any tip pooling systems at the workplace. Because Florida’s minimum wage rate is higher than the federal minimum wage rate, the state laws supersede the federal regulations.
Tip Credits and the Minimum Cash Wage in Florida
Since the rules for tipped employees are different for non-tipped employees, there are other ways that employers can calculate the minimum amount earned by a tipped employee. One of these ways is through tip credits.
The Florida tip credit is currently $3.02 per hour – this means that employers can claim a $3.02 hourly credit against the tipped employee’s minimum wage. This credit effectively turns the $11.00 minimum wage into a $7.98 per hour minimum wage that employers must pay to tipped employees no matter how much they earn.
Let’s suppose tipped employees earn less than $7.98 per hour as their tipped wage. In that case, the employer must pay the difference between what they made and $7.98 per hour. This pay is called the minimum cash wage. It ensures that tipped employees earn a wage, even if a slow workweek or other downturns occurs and they cannot receive sufficient tips. This minimum wage rate ensures that servers and others in tipped roles in Florida that do not make enough with tips can earn a weekly wage when working full-time of just over $440.
Alternatively, some tipped employees in Florida will work more than 40 hours per week, especially if they are covering shifts for other employees, and may qualify for overtime pay. The table below displays the tipped minimum wage rates in Florida over the years.
|State||Tipped Wage||Tip Credit|
|Florida tipped minimum wage 2022-2023||$7.98||$3.02|
|Florida tipped minimum wage 2022||$6.98||$3.02|
|Florida tipped minimum wage 2021||$5.54||$3.11|
|Florida tipped minimum wage 2020||$5.44||$3.12|
|Florida tipped minimum wage 2019||$5.23||$3,23|
|Florida tipped minimum wage 2018||$5.08||$3.17|
What Does This Mean for my Business?
If you are starting a new business in Florida or considering Florida as a location for buying a business, you should take this information about tipped employees and the state 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 employees can help you make an informed decision.
In Florida, tipped jobs are a mainstay of the economy and accessible for those seeking employment given the tourism-oriented nature of the Florida economy. Today there are over 1,096,000 food service jobs in Florida working across 41,366 eating and drinking establishments, and there are over 1,018,000 leisure and hospitality employees working in hotels and other similar establishments. Both these types of service-sector businesses generated a combined total of around $58.4 billion annually.
Most U.S. states and territories require that tipped employees make either the full state minimum wage or make a minimum cash wage higher than the FLSA’s requirements. Regardless of where you locate your business in the U.S., you will likely need to have a pay rate for tipped employees higher than the federal tipped employee rate.
If you have a claim related to employment, you can find out more information on the Florida Department of Economic Opportunity’s website.