Glossary
The words on your pay stub and in wage law, in plain language.
- Allocated tipsExtra tip income an employer assigns you on your W-2 when reported tips at a large restaurant add up to less than 8% of sales.
- Back of houseKitchen and support staff who do not serve guests, such as cooks, prep cooks and dishwashers. They are usually not tipped employees.
- Break premiumExtra pay owed when your employer does not provide a required meal or rest break. In California it is one hour of pay per day for each type.
- Cash wageThe hourly rate your employer pays you directly when it takes a tip credit. The federal minimum is $2.13; many states set it higher.
- Chain of serviceThe workers who help deliver the service a guest tips for, like servers, bussers, runners and bartenders. It shapes who can share tips.
- Credit card tip feeThe card processing fee some employers take from tips paid by card. Federal law allows only the share of the fee on the tip; some states ban it.
- Daily overtimeOvertime owed for long days, not just long weeks. Only a few states have it, such as California after 8 hours in a workday.
- DeductionAny amount taken out of your pay. Taxes are required; others, like uniforms or walkouts, are limited by federal and state law.
- Dual jobsWhen a tipped worker also holds a separate non-tipped job for the same employer. The tip credit can only be taken for the tipped job.
- FICASocial Security (6.2%) and Medicare (1.45%) taxes taken from your wages and reported tips. Your employer pays a matching amount.
- Gross payYour total earnings for the pay period before any taxes or deductions are taken out.
- Meal breakA longer break, usually 30 minutes, for eating. Federal law does not require one, but many states do, and a few add a premium when missed.
- Minimum wageThe lowest hourly pay the law allows. The federal rate is $7.25; when your state or city sets a higher rate, the higher one applies.
- Net payWhat actually lands in your account: gross pay minus taxes and deductions. For tipped workers it can be tiny or even zero.
- OvertimeExtra pay of at least 1.5 times your regular rate for hours over 40 in a workweek. A few states also count long days.
- Paid sick leavePaid time off for illness or care that you earn as you work. No federal law requires it; many states do, often 1 hour per 30 worked.
- Pay periodThe stretch of days one paycheck covers, such as weekly, every two weeks or twice a month. It is not the same thing as your workweek.
- Regular rateThe hourly rate overtime is based on: your pay for the workweek, minus a few exclusions, divided by the hours you worked.
- Reported tipsTips you report to your employer, through the POS or IRS Form 4070. They are taxable wages and count toward your Social Security record.
- Rest breakA short break during a shift, often 10 minutes per 4 hours where states require it. Under federal law, short breaks you get must be paid.
- Service chargeA mandatory fee added to the bill, like an automatic 18% for large parties. Under federal law it is not a tip; it belongs to the employer.
- Social Security wage baseThe yearly earnings cap for Social Security tax. For 2026 it is $184,500; once you pass it, the 6.2% stops for the rest of the year.
- Tip creditThe part of the minimum wage an employer covers with your tips instead of cash. Federally up to $5.12 an hour, and only if your tips cover it.
- Tip credit noticeWhat your employer must tell you before taking a tip credit: your cash wage, the credit amount, and that you keep your tips.
- Tip poolAn arrangement where tips are combined and split among workers. Under federal law, owners, managers and supervisors can never take a share.
- Tip-outMoney you pass from your own tips to coworkers, often a percentage of your sales, for example 3% of sales to the bussers.
- Tipped employeeA worker who customarily and regularly gets more than $30 a month in tips. Only tipped employees can be paid with a tip credit.
- Wage claimA complaint you file with your state labor agency or the U.S. Department of Labor to recover unpaid wages. It is free and needs no lawyer.
- Wage theftAny time an employer fails to pay wages or tips you earned, such as missing hours, unpaid overtime, kept tips or illegal deductions.
- WorkweekA fixed, repeating period of 7 days (168 hours) set by your employer. Overtime and minimum wage are figured one workweek at a time.
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