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How to use the tipped employee overtime calculator
- Enter the hours worked in the workweek.
- Enter the cash wage per hour and the minimum wage that applies; the defaults are the federal $2.13 and $7.25.
- Enter the tips received this week, and any non-discretionary bonus or commission.
- Read the regular rate, the overtime rate, the cash wage for each overtime hour and the cash wages due.
- Copy or print the result.
How is overtime calculated for tipped employees?
The tip credit per hour is the minimum wage minus the cash wage you enter. The regular rate is the cash wage plus the tip credit, plus any non-discretionary bonus divided by hours; tips above the credit are not counted. Hours over 40 earn 1.5 times the regular rate. The pay required is the regular rate times all hours plus an extra half for overtime hours, and the cash wages due are that amount less the tip credit, which cannot be more than the tips actually received. This is the federal method; state rules can differ.
For example, a server paid a $2.13 cash wage works 45 hours in a state using the federal $7.25 minimum wage. The tip credit is $5.12 an hour, so the regular rate is $7.25 and overtime is $10.875, which leaves $5.755 in cash for each overtime hour. Cash wages due are $113.98 if tips cover the credit. The hours and wages are made up; yours come from what you type.
Who should use the tipped employee overtime calculator
- Servers, bartenders and other tipped employees checking their overtime pay
- Restaurant owners and payroll staff setting up overtime for tipped workers
- Anyone comparing the cash overtime rate with 1.5 times the cash wage
Who should not use this
- Anyone in a state that does not allow a tip credit; enter the full minimum wage as the cash wage
- Employees who are exempt from overtime
- Anyone who needs a legal opinion on whether a tip credit was properly taken
Limitations
- It applies the federal method and the figures you enter; state rules can be more favorable to the employee.
- It assumes the employer met the tip credit conditions, such as telling the employee in advance.
- It does not model tip pools or service charges.
- Results are estimates, not legal, tax, payroll or financial advice.
- Nothing is uploaded or stored on a server. Clearing your browser data also removes the saved profile.
How is overtime figured for a tipped employee?
Under 29 CFR 531.60, the regular rate of a tipped employee is the total pay for the week divided by the hours worked, and that pay includes the direct cash wage plus the tip credit the employer takes. Tips above the credit are not part of the regular rate. The federal minimum wage is $7.25, the lowest cash wage is $2.13 and the largest tip credit is $5.12, so a worker on $2.13 whose employer takes the full credit has a regular rate of $7.25. Overtime is 1.5 times that rate, $10.875 an hour, and the employer can count the same $5.12 tip credit against it, which leaves a cash wage of $5.755 for each overtime hour.
For a 45-hour week at the federal figures, the pay required is $344.38: $7.25 for 45 hours and an extra half, $3.625, for the 5 overtime hours. The tip credit covers $230.40 of that if the employee received at least that much in tips, so the employer owes $113.98 in cash wages. That is 40 hours at $2.13 plus 5 hours at $5.755.
| Hours worked | Overtime hours | Pay required | Cash wage due |
|---|---|---|---|
| 40 | 0 | $290.00 | $85.20 |
| 42 | 2 | $311.75 | $96.71 |
| 45 | 5 | $344.38 | $113.98 |
| 48 | 8 | $377.00 | $131.24 |
| 50 | 10 | $398.75 | $142.75 |
| 55 | 15 | $453.13 | $171.53 |
| 60 | 20 | $507.50 | $200.30 |
What must the employer do to take a tip credit?
The tip credit is allowed only if the employer meets the conditions in 29 CFR 531.59 and section 3(m)(2)(A) of the Fair Labor Standards Act. If any condition is missed, the employer cannot use the credit and owes the full minimum wage in cash, and overtime on that basis.
- Tell the employee before using the credit: the cash wage, the amount of the credit and that the employee keeps all tips, except in a pool limited to employees who customarily and regularly receive tips.
- Pay a cash wage of at least $2.13 an hour. The credit is the minimum wage minus the cash wage paid, and the employer may claim less than the maximum but never more.
- Make sure the employee received at least that much in tips. If tips fall short, the employer pays the difference so cash wages and tips together reach the minimum wage.
- Apply the credit only to hours worked in an occupation where the employee customarily receives tips.
Do state rules change tipped overtime?
This calculator uses the federal method. Many states set a higher minimum wage or a higher cash wage for tipped workers, and some limit or do not allow a tip credit. Where a state rule is more favorable to the employee, the state rule applies. Enter your state’s minimum wage and your actual cash wage in the calculator to see the result on those figures, and check your state labor department for the rules that apply to you.
Common tipped overtime mistakes
Most mistakes come from using the low cash wage as the base for overtime instead of the regular rate that includes the tip credit.
- Paying 1.5 times $2.13, which is only $3.195 an hour, instead of 1.5 times the regular rate less the tip credit.
- Counting all of the employee’s tips in the regular rate. Only the credit counts, and tips above it are left out.
- Taking a tip credit without having told the employee.
- Forgetting a non-discretionary bonus or commission, which belongs in the regular rate.
- Applying a tip credit to hours spent in a non-tipped occupation.
Sources and review
Reviewed on 01 Nov 2026 against the published sources below. Rules and prices change, so check the current position before you rely on a figure.
- 29 CFR 531.60: Overtime payments for tipped employees (Cornell Legal Information Institute)
- 29 CFR 531.59: The tip wage credit (Cornell Legal Information Institute)
- 29 U.S.C. 203(m)(2)(A): Wage, tip credit and tip retention (Cornell Legal Information Institute)
- U.S. Department of Labor: State minimum wage laws, tipped minimum wage
Common questions
How is overtime calculated for tipped employees?
Do tipped employees get overtime?
What is the overtime rate for a $2.13 tipped wage?
Are tips included in the regular rate?
What if a tipped employee does not earn enough in tips?
Related tools
Results are estimates, not legal, tax, payroll or financial advice. They follow the rules and rates named under Sources, leave out anything the page does not mention (such as other income, credits, local rules or your employer’s own policy), and can differ from a payroll run, a tax return or an agency’s decision. See the disclaimer. Found a mistake? Report an error in a calculation.