DOL’s New “Dual Jobs” Regulation Changes How Tipped Employees Get Paid
Read MoreBetween December 2025 and January 2026, our compliance research team compiled the most recent waitress minimum wage data from all 50 U.S. states and the District of Columbia. This report aggregates information from the U.S. Department of Labor Wage and Hour Division, individual state labor departments, and 15 years of multi-state hospitality payroll experience working with enterprise restaurant operators.
The following analysis provides state-by-state waitress minimum wage rates, tip credit calculations, and compliance requirements. We examined three critical components: state minimum wage floors, minimum cash wage requirements for tipped employees, and maximum allowable tip credits. Our dataset reflects regulations effective as of January 1, 2026.
This guide is designed for multi-location restaurant operators, hospitality groups, and payroll managers navigating the complexity of tipped wage compliance across state lines.
| State | Minimum Wage | Minimum Cash Wage (Tipped) | Maximum Tip Credit | Combined Cash & Tip Wage |
|---|---|---|---|---|
| Alabama | $7.25 | $2.13 | $5.12 | $7.25 |
| Alaska | $13.00 | $13.00 | $0.00 | $13.00 |
| Arizona | $15.15 | $12.15 | $3.00 | $15.15 |
| Arkansas | $11.00 | $2.63 | $8.37 | $11.00 |
| California | $16.90 | $16.90 | $0.00 | $16.90 |
| Colorado | $15.16 | $12.14 | $3.02 | $15.16 |
| Connecticut | $16.94 | $6.38 | $10.56 | $16.94 |
| Delaware | $15.00 | $2.23 | $12.77 | $15.00 |
| D.C. | $17.95 | $10.00 | $7.95 | $17.95 |
| Florida | $14.00 | $10.98 | $3.02 | $14.00 |
| Georgia | $7.25 | $2.13 | $5.12 | $7.25 |
| Hawaii | $16.00 | $14.75 | $1.25 | $16.00 |
| Idaho | $7.25 | $3.35 | $3.90 | $7.25 |
| Illinois | $15.00 | $9.00 | $6.00 | $15.00 |
| Indiana | $7.25 | $2.13 | $5.12 | $7.25 |
| Iowa | $7.25 | $4.35 | $2.90 | $7.25 |
| Kansas | $7.25 | $2.13 | $5.12 | $7.25 |
| Kentucky | $7.25 | $2.13 | $5.12 | $7.25 |
| Louisiana | $7.25 | $2.13 | $5.12 | $7.25 |
| Maine | $15.10 | $7.55 | $7.55 | $15.10 |
| Maryland | $15.00 | $3.63 | $11.37 | $15.00 |
| Massachusetts | $15.00 | $6.75 | $8.25 | $15.00 |
| Michigan | $13.73 | $5.49 | $8.24 | $13.73 |
| Minnesota | $11.41 | $11.41 | $0.00 | $11.41 |
| Mississippi | $7.25 | $2.13 | $5.12 | $7.25 |
| Missouri | $15.00 | $7.50 | $7.50 | $15.00 |
| Montana | $10.85 | $10.85 | $0.00 | $10.85 |
| Nebraska | $15.00 | $2.13 | $12.87 | $15.00 |
| Nevada | $12.00 | $12.00 | $0.00 | $12.00 |
| New Hampshire | $7.25 | $3.27 | $3.98 | $7.25 |
| New Jersey | $15.92 | $6.05 | $9.87 | $15.92 |
| New Mexico | $12.00 | $3.00 | $9.00 | $12.00 |
| New York | $17.00 | Varies | Varies | $17.00 |
| North Carolina | $7.25 | $2.13 | $5.12 | $7.25 |
| North Dakota | $7.25 | $4.86 | $2.39 | $7.25 |
| Ohio | $11.00 | $5.50 | $5.50 | $11.00 |
| Oklahoma | $7.25 | $2.13 | $5.12 | $7.25 |
| Oregon | $15.05 | $15.05 | $0.00 | $15.05 |
| Pennsylvania | $7.25 | $2.83 | $4.42 | $7.25 |
| Rhode Island | $16.00 | $3.89 | $12.11 | $16.00 |
| South Carolina | $7.25 | $2.13 | $5.12 | $7.25 |
| South Dakota | $11.85 | $5.93 | $5.92 | $11.85 |
| Tennessee | $7.25 | $2.13 | $5.12 | $7.25 |
| Texas | $7.25 | $2.13 | $5.12 | $7.25 |
| Utah | $7.25 | $2.13 | $5.12 | $7.25 |
| Vermont | $14.42 | $7.21 | $7.21 | $14.42 |
| Virginia | $12.77 | $2.13 | $10.64 | $12.77 |
| Washington | $17.13 | $17.13 | $0.00 | $17.13 |
| West Virginia | $8.75 | $2.62 | $6.13 | $8.75 |
| Wisconsin | $7.25 | $2.33 | $4.92 | $7.25 |
| Wyoming | $7.25 | $2.13 | $5.12 | $7.25 |
Source: U.S. Department of Labor, January 1, 2026
Key findings from the dataset:
1. Eight states eliminate tip credit entirely. Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington require employers to pay tipped employees the full state minimum wage before tips. This represents the highest wage floor for waitresses nationwide, with Washington leading at $17.13 per hour.
2. Twenty-two states mandate a minimum cash wage above the federal floor. States including Arizona ($12.15), Connecticut ($6.38), and Florida ($10.98) require employers to pay tipped employees more than the federal minimum cash wage of $2.13. This trend accelerated between 2020 and 2026 as states prioritized income stability for tipped workers.
3. Twenty states still follow the federal minimum cash wage of $2.13. Alabama, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, and Wyoming allow employers to pay the federal minimum. In these states, waitresses rely more heavily on tips to reach the full minimum wage.
Compliance caveat: Some cities and counties have enacted higher minimum wage rates than their state. Employers must apply the highest applicable rate (federal, state, or local). Notable examples include New York City ($19.00), Seattle ($20.29), and San Francisco ($18.67).
State-Level Tipped Wage Requirements by Region – 2026
This breakdown categorizes states by their approach to tipped wage laws, revealing regional patterns in wage policy.
| Tip Credit Category | Number of States | Regional Concentration | Average Min. Cash Wage |
|---|---|---|---|
| No Tip Credit Allowed | 8 | West Coast (5), Upper Midwest (2), Alaska (1) | $15.42 |
| Higher Than Federal Minimum | 22 | Northeast (9), Mid-Atlantic (6), Southeast (4), Mountain West (3) | $7.84 |
| Federal Minimum ($2.13) | 20 | South (12), Plains (5), Mountain West (3) | $2.13 |
Source: U.S. Department of Labor, January 1, 2026
Regional policy patterns observed:
1. West Coast and Northeast states lead in wage protection. States in these regions eliminated or significantly reduced tip credits between 2015 and 2026. California, Washington, and Oregon prohibit tip credits entirely. Massachusetts, Connecticut, and New York maintain minimum cash wages between $6.75 and $10.00.
2. Southern states predominantly follow federal minimums. Twelve of the twenty states allowing the $2.13 federal minimum cash wage are located in the South and Southeast regions. This creates compliance complexity for multi-state restaurant chains operating across both high-wage and low-wage states.
3. Mountain and Plains states show mixed approaches. Colorado requires $12.14 minimum cash wage, while neighboring Wyoming allows $2.13. This regional variation creates operational challenges for hospitality groups expanding across adjacent states with different wage philosophies.
Tip Credit Calculation Examples by State Type – 2026
Understanding how tip credits work in practice requires examining specific scenarios. This table demonstrates how the same employee earnings translate across different state wage structures.
| State Example | State Min. Wage | Min. Cash Wage | Max Tip Credit | Hourly Tips Earned | Employer Must Pay |
|---|---|---|---|---|---|
| California | $16.90 | $16.90 | $0.00 | $8.00 | $16.90 |
| Florida | $14.00 | $10.98 | $3.02 | $8.00 | $10.98 |
| Connecticut | $16.94 | $6.38 | $10.56 | $8.00 | $8.56* |
| Texas | $7.25 | $2.13 | $5.12 | $8.00 | $2.13 |
| Nebraska | $15.00 | $2.13 | $12.87 | $8.00 | $7.00* |
*Employers must pay an additional amount when tips do not cover full tip credit amount.
Source: U.S. Department of Labor, January 1, 2026
Calculation complexity findings:
1. No-tip-credit states provide simplest compliance model. In California, employers pay $16.90 per hour regardless of tip amounts. Tips belong entirely to the employee. Payroll calculations are straightforward: hourly wage Ă— hours worked.
2. High-tip-credit states create reconciliation requirements. In Nebraska, employers can claim up to $12.87 in tip credit. If a waitress earns less than $12.87 per hour in tips, the employer must pay the difference to reach the $15.00 minimum wage. This requires tracking individual employee tip amounts per shift and calculating make-up pay obligations.
3. Mid-range states balance predictability and flexibility. Florida's $10.98 minimum cash wage provides employees with guaranteed income while allowing employers to claim a modest $3.02 tip credit. This reduces extreme dependence on tip volume fluctuations.
State Minimum Wage Changes (2024-2026)
Minimum wage rates are not static. This table tracks states that increased waitress wages between January 2024 and January 2026.
| State | 2024 Min. Cash Wage | 2026 Min. Cash Wage | Change | Next Scheduled Increase |
|---|---|---|---|---|
| Arizona | $11.15 | $12.15 | +$1.00 | Jan 2027 (indexed to CPI) |
| California | $16.00 | $16.90 | +$0.90 | Jan 2027 (indexed to CPI) |
| Connecticut | $6.38 | $6.38 | $0.00 | June 2027 (+ $0.50) |
| Florida | $10.00 | $10.98 | +$0.98 | Sep 2027 (+ $1.00) |
| Nebraska | $2.13 | $2.13 | $0.00 | Under review |
| New York | Varies | Varies | +$0.50 avg | Dec 2027 (+ $0.50) |
| Washington | $16.28 | $17.13 | +$0.85 | Jan 2027 (indexed to CPI) |
Source: State labor department publications, compiled January 2026
Regulatory trend observations:
1. Indexed increases dominate high-wage states. Arizona, California, and Washington tie minimum wage adjustments to Consumer Price Index (CPI) changes. This creates annual compliance updates for multi-state operators as rates adjust each January based on inflation data.
2. Legislative increases follow multi-year schedules. Florida voters approved incremental increases reaching $15.00 by September 2026. Connecticut enacted a stepped increase plan extending through 2028. Employers need multi-year compliance forecasting to budget labor costs accurately.
3. Federal minimum cash wage remains frozen since 2009. Twenty states still allow the $2.13 federal minimum cash wage, unchanged for 17 years. This creates widening gaps between high-wage and low-wage states. A waitress in Washington earns a minimum of $17.13 per hour before tips, while a waitress in Texas can be paid $2.13 per hour, relying on tips to reach $7.25.
Understanding Federal Tipped Wage Laws
The Fair Labor Standards Act (FLSA) establishes federal baseline requirements for tipped employees:
Federal Minimum Wage: $7.25 per hour
Minimum Cash Wage: $2.13 per hour
Maximum Tip Credit: $5.12 per hour
Under federal law, an employer can pay a tipped employee a minimum cash wage of $2.13 per hour if the employee's tips combined with the cash wage equal at least $7.25 per hour. If tips fall short, the employer must make up the difference.
What is a Tip Credit?
A tip credit is the amount an employer can credit from an employee's tips toward their minimum wage obligation. The federal maximum is $5.12 per hour. States can:
Prohibit tip credits entirely (8 states)
Set a lower maximum tip credit than federal law (22 states)
Follow the federal $5.12 maximum (20 states)
For a tipped employee to qualify under federal law, they must:
Customarily and regularly receive more than $30 per month in tips
Perform duties that directly generate tips (customer service roles)
Retain all tips except when participating in valid tip pools
Compliance Best Practices for Multi-Location Restaurant Operators
Automate state-specific wage calculations. Manual payroll systems cannot reliably apply different minimum cash wages, tip credit limits, and make-up pay requirements across multiple state locations. Enterprise payment management systems apply state-specific rules automatically based on each location's address.
Track individual employee tip amounts by shift. Federal and state laws require employers to prove employees received enough tips to justify claimed tip credits. Real-time POS integration captures tip data at the transaction level, eliminating manual tracking and providing audit-ready records.
Calculate and pay tip credit make-up amounts immediately. If an employee's tips fall short of the required minimum wage, employers must pay the difference in the same pay period. Automated systems flag shortfalls and calculate make-up pay obligations before payroll closes.
Monitor regulatory changes across all operating states. Minimum wage laws change annually in many states. Subscribe to state labor department notifications and implement systems that update compliance rules automatically when rates change.
Maintain detailed wage and tip records for each employee. The FLSA requires employers to keep records of total tips received, tip credit amounts claimed, and hours worked. Automated platforms timestamp all transactions and maintain permanent audit trails.
Provide employees with earnings transparency. Workers need visibility into how their wages and tips are calculated. Digital platforms allow employees to view shift-by-shift earnings breakdowns, tip amounts, and total compensation in real time.
Frequently Asked Questions
Q: What is the difference between minimum wage and minimum cash wage?
A: The minimum wage is the lowest total hourly compensation an employee can receive (cash wage + tips). The minimum cash wage is the lowest direct payment an employer can make to a tipped employee, with tips expected to make up the difference.
Q: Can an employer take a tip credit for any employee?
A: No. An employer can only take a tip credit for employees who customarily and regularly receive more than $30 per month in tips and primarily perform customer-facing, tip-generating duties.
Q: What happens if an employee's tips are not enough to make up the difference to the minimum wage?
A: The employer is legally required to pay the difference.
Automating Tipped Wage Compliance Across Multiple States
Navigating the patchwork of state-level tipped wage laws is a significant compliance burden for multi-location restaurant operators. The administrative overhead of tracking different minimum cash wages, tip credit rules, and make-up pay obligations across states creates risk and inefficiency. Manual systems are no longer viable in this complex regulatory environment.
Gratuity Solutions pioneered automated tip distribution over 15 years ago. Our enterprise-grade payment platform, trusted by 14,000+ locations, automates state-specific wage compliance. We eliminate manual calculations, ensure accuracy, and provide a permanent audit trail for every transaction. This protects your business from costly compliance errors and frees up your managers to focus on serving guests.
Request a Demo to See How Our Platform Automates Tipped Wage Compliance
Sources
U.S. Department of Labor, Wage and Hour Division. (2026, January 1). Minimum Wages for
Tipped Employees. Retrieved from
https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
State Labor Department Publications. (2024-2026 ). Compiled from:
Arizona Industrial Commission. Arizona Minimum Wage
https://www.azica.gov/labor-minimum-wage-main-page
California Department of Industrial Relations. Minimum Wage
https://www.dir.ca.gov/dlse/faq_minimumwage.htm
Connecticut Department of Labor. Connecticut Minimum Wage
https://www.ctdol.state.ct.us/wgwkstnd/wage-rates/minimum-wage.htm
Florida Department of Commerce. Florida Minimum Wage
https://floridajobs.org/minimum-wage
New York State Department of Labor. Minimum Wage
https://www.labor.ny.gov/workerprotections/laborstandards/workprot/minwage.shtm
Washington State Department of Labor & Industries. Minimum Wage
https://www.lni.wa.gov/workers-rights/wages/minimum-wage
