Are employers allowed to pay tipped employees less than minimum wage?

In Pennsylvania, employers are allowed to pay tipped employees less than the minimum wage under certain circumstances. The Pennsylvania Minimum Wage Act requires employers to pay their tipped employees a “minimum wage”, which is calculated by adding the state minimum wage rate and the federal tipped employee minimum wage rate. The current minimum wage rate in Pennsylvania is $7.25 an hour. This means that employers must pay their tipped employees at least $7.25 an hour plus the federal tipped employee minimum wage rate of $2.13 an hour. This brings the minimum wage rate for tipped employees in Pennsylvania to $9.38 an hour. However, there is one important exception: employers may pay their tipped employees less than minimum wage if the employees are eligible for tip credits. Tip credits are a payment option that allow employers to pay their tipped employees a lower base wage—as low as $2.83 an hour—as long as their tips are sufficient enough to meet the minimum wage rate. To be eligible for tip credits, tipped employees must be informed of their eligibility in writing and the tips they receive must at least equal the difference between the lower base wage and the minimum wage. If the tips do not meet the minimum wage rate, employers must make up the difference. If employers do not comply with the Pennsylvania Minimum Wage Act or if their tipped employees are not eligible for tip credits, they may be subject to substantial fines or legal action. As a result, employers should ensure that they are paying their tipped employees the minimum wage or the applicable tipped employee minimum wage rate.

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Are employers allowed to pay tipped employees less than minimum wage?

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