Definition: When an employee (typically waitstaff or a similar occupation) receives tips, the employer is only required to pay $2.13 per hour in wages. However, the total amount earned ($2.13/hour plus tips) must equal the federal minimum wage. This is known as the tip credit provision or tip credit allowance, because it allows the employer to pay less than the minimum wage, because the employee is receiving tips. A tipped employee is defined as one who receives at least $30 a month in tips.
For more information visit the Department of Labor web site:
Tips
