Tipped Employee Overtime Calculator
The math for tipped overtime is tricky. Employers sometimes calculate it incorrectly. Use this tool to instantly find your legal cash overtime rate under FLSA tip credit rules.
Employers sometimes incorrectly calculate tipped overtime by multiplying the sub-minimum cash wage (e.g., $2.13) by 1.5. This generally does not satisfy overtime rules. Overtime should be calculated by multiplying the full minimum wage by 1.5, and then subtracting the tip credit.
Estimated Results
Tipped overtime formula
Calculation breakdown
Tipped overtime must be based on the full minimum wage before subtracting a valid tip credit.
Minimum cash overtime rate = full minimum wage × 1.5 minus the valid tip credit.
Sources
- DOL Fact Sheet #15: Tipped Employees Under the FLSA, U.S. Department of Labor
- DOL Fact Sheet #2: Restaurants and Fast Food Establishments, U.S. Department of Labor
Checked against these sources on . Estimates only, not legal or payroll advice. How we calculate · Report an error
How is tipped overtime legally calculated?
Under the federal Fair Labor Standards Act (FLSA), calculating overtime for an employee receiving a sub-minimum cash wage (like a restaurant server or bartender) requires specific math.
The Illegal Way (Very Common):
Multiplying your sub-minimum direct cash wage by 1.5. For example, if you earn $2.13/hr, paying only $3.20/hr for overtime can underpay tipped overtime when a tip credit is being used.
The Legal Way (The FLSA Rule):
Your employer must multiply the full minimum wage by 1.5, and then subtract the tip credit.
Example Calculation (Federal $7.25 Wage)
- Full Minimum Wage = $7.25
- Cash Wage Paid = $2.13
- Tip Credit Claimed = $5.12 ($7.25 - $2.13)
Overtime Rate (1.5×) = $7.25 × 1.5 = $10.88
Minus Tip Credit = $10.88 - $5.12 = $5.76
Legal Cash Overtime Rate = $5.76/hr
State tipped wage differences
Many states set a higher tipped cash wage than the federal $2.13/hour, and some states prohibit tip credits entirely. Use the state selector in the calculator and compare your result with the regular rate of pay calculator if bonuses, service charges, or multiple pay rates are involved.
FAQs
How is tipped overtime calculated?
For federal tipped overtime, multiply the full minimum wage by 1.5, then subtract the valid tip credit.
Can an employer multiply $2.13 by 1.5 for server overtime?
No. Under federal tip-credit math, overtime is based on the full minimum wage before subtracting the valid tip credit.
Do state tipped wage rules matter?
Yes. Some states require higher cash wages or prohibit tip credits, so tipped overtime must use the state or local rule that is more protective to employees.
Related calculators
Sources
- DOL Fact Sheet #15: Tipped Employees Under the FLSA, U.S. Department of Labor
- DOL Fact Sheet #2: Restaurants and Fast Food Establishments, U.S. Department of Labor
Checked against these sources on . Estimates only, not legal or payroll advice. How we calculate · Report an error