Payroll for tipped staff

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• Federal law allows a $2.13/hr cash wage if tips bring pay to at least $7.25/hr. Many states require more, and California allows no tip credit.
• Tips count as wages for FICA. Employees report tips of $20+ a month to you.
• Owners and managers can't keep tips. Pool rules vary by state (see our tip pool calculator).

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Sources: DOL tipped minimum wages, IRS tip reporting. Updated Nov 2, 2026. Not tax or legal advice.