Pay rules for servers: tips, tip credit and your paycheck

Server pay rules come down to one question: are your tips being counted the way the law allows? Most servers get a low hourly cash wage, and the restaurant counts tips toward the rest of the minimum wage. That arrangement has rules. This page covers the ones that matter most for servers and what to look for on your stub.

How server pay works

Under federal law, a restaurant can pay you as little as $2.13 an hour if you are a tipped employee and it takes a tip credit of up to $5.12. Your cash wage plus the tips you keep must reach at least $7.25 for every hour in each workweek. If they fall short, the restaurant pays the difference.

Your state may change this a lot. California, Washington, Oregon, Nevada, Minnesota, Montana and Alaska do not allow a tip credit, so servers there get the full state minimum wage plus tips. Other states allow a credit but require a higher cash wage, such as $11.98 in Florida from September 30, 2026. Your state page has your numbers.

Before taking a tip credit, your employer has to explain it to you (the tip credit notice), and you have to keep all your tips except through a valid tip pool.

What to check on your stub

• Hours. Compare regular and overtime hours with your own record, shift by shift.
• Hourly rate. It should be at least your state's tipped cash wage, or the full minimum wage in a state with no tip credit.
• Tips. Card tips paid through payroll and the cash tips you reported should match your own totals. Many stubs add reported cash tips to gross pay and subtract them again lower down.
• Overtime rate. At $2.13 under federal rules, overtime is $5.755 an hour, not $3.195.
• Deductions. Look for card fees, walkouts, shortages, uniforms or anything labeled "adjustment".
• Taxes. Social Security and Medicare should come to about 7.65% of wages plus reported tips. See FICA.

A $0.00 check can be correct, because tax on a week of tips often uses up a small cash wage. See how to read a restaurant pay stub.

Common problems for servers

Tip credit shortfalls on slow weeks

Slow weeks, slow seasons and shifts heavy on side work can leave you under the minimum. Say you work 28 hours at $2.13 in a slow week and keep $95 after tip-outs. The federal minimum for those hours is $203.00. You got $59.64 in wages plus $95 in tips, which is $154.64, so the restaurant owes $48.36 for that week.

This make-up gets missed because nobody runs the numbers. The tip credit calculator does it for one week at a time.

Card fee deductions

Federal rules let an employer take only the card fee's share of your tip: with a 3% fee, $0.60 from a $20 tip. Some states ban the deduction outright, including California, Massachusetts, Minnesota and Pennsylvania. Card tips also have to be paid by your regular payday, even if the card company has not paid the restaurant yet. See credit card tip fee.

Walkouts, comps and order mistakes

When a table walks out or a meal gets comped, some restaurants make the server cover it. Under federal law, that kind of deduction cannot cut into the minimum wage, and for someone paid a tipped cash wage there is usually no room for it. Taking it from your tips instead is not allowed either, because an employer cannot keep employees' tips.

Many states ban walkout deductions entirely, including New York, Washington and Oregon. See which deductions are illegal.

Tip-outs and tip pools

Required tip-outs to bussers, runners and the bar are generally legal. Managers and owners can never take a cut, and if you are paid with a tip credit, kitchen staff cannot be in the pool. Keep a record of what you tip out each shift, because those amounts lower the tips that count toward your minimum wage. See how tip pools work.

Side work

Rolling silverware and restocking stations are usually treated as part of a server's job. If you are regularly put on a separate job with no tips, like prep or dish shifts, those hours need the full minimum wage. A few states, including New York, Pennsylvania and Connecticut, also limit how much non-tipped work can be paid at the tipped rate. See dual jobs.

Automatic gratuities on large parties

An automatic 18% on a big table may legally be a service charge, not a tip. Under federal law it belongs to the employer unless it is paid to you as wages. Massachusetts and New York give staff stronger rights to these charges. See is a service charge a tip?

If something looks wrong

Run your stub through the paycheck checker. It compares your hours, tips and deductions with your state's rules and shows what may be owed.

Then start with your manager or payroll. Many errors get fixed on the next check once someone points them out. If not, your state labor agency takes wage claims for free, without a lawyer. See what to do if you were underpaid.

Your own daily record of hours, tips and tip-outs makes each of these steps easier. A notes app works, and so does Cashout.