Tips, Base Pay, and Overtime: A Restaurant Salary Guide
Understanding how pay works in restaurants can be confusing, especially when tips, base wages, and overtime rules overlap. This guide breaks down the essentials in clear terms for U.S. readers—what counts as base pay, how tips and tip credits operate, and what overtime means for both tipped and non-tipped roles—so you can read your paycheck with confidence.
Pay in restaurants combines several moving parts: an hourly base wage, tips or service charges, potential premiums, and overtime. Knowing how these pieces fit together helps workers and managers stay compliant with labor laws and avoid pay disputes. This overview focuses on core pay concepts for front and back of house in the United States, including federal rules and examples of how state standards can differ.
Restaurant jobs guide: what shapes pay?
A typical restaurant paycheck is built from an hourly base rate plus variable earnings from customer tips or employer-applied service charges. The exact mix depends on job type (server, bartender, runner, host, cook, dishwasher), whether the role is tipped under federal and state rules, and how many hours are worked in a week. Employers must keep accurate time records, apply the correct wage category for each shift, and ensure the final pay at least meets applicable wage laws.
Several factors influence overall take-home pay. Scheduling and shift length affect overtime eligibility. Split shifts can add premiums in some jurisdictions. Work performed before or after service—like setup, cleaning, or closing—must be paid. Uniform and tool policies can require reimbursements if they would otherwise push pay below minimum wage. Where local laws require paid sick leave or predictability pay, those add-ons appear on pay statements as separate line items.
Restaurant career salary: tips and tip credits
Tips belong to employees, with narrow exceptions (for example, valid tip pools among eligible workers). Under federal law, employers may claim a tip credit toward meeting minimum wage for employees who customarily and regularly receive tips, but only if strict notice and recordkeeping requirements are met and state law allows it. Some states do not allow any tip credit, requiring employers to pay the full state minimum in cash, and tipped staff keep their tips on top of that.
Tip pools must be limited to eligible positions where required. In places that allow non-tipped staff in a pool, the employer generally cannot take a tip credit at the same time. Credit card processing fees may be deducted proportionally from credit card tips under federal rules, but many states prohibit or restrict this practice further. Service charges are not tips under federal law; they are employer revenue that may be distributed as wages and are subject to payroll tax.
A key compliance issue is side work: time spent on tasks that support tip-producing duties. Federal rules limit how much non-tipped support work can be counted toward a tip credit and restrict long uninterrupted blocks of such work. Many states set stricter thresholds. Employers should track duties by time and ensure tip credit is applied only to qualifying work.
Restaurant jobs salary guide: overtime rules
Overtime under federal law generally applies after 40 hours in a workweek, paid at 1.5 times the regular rate. Some states add daily overtime; for example, daily thresholds may trigger time-and-a-half after a set number of hours in a day and even double time beyond a higher threshold. The regular rate includes most nondiscretionary bonuses and service-charge distributions, but not tips. Accurate timekeeping and correct regular-rate calculations are essential.
The baseline pay floor varies widely by jurisdiction. The figures below illustrate selected standards relevant to restaurants, including places that allow or prohibit a tip credit. These examples are for context on wage floors that interact with tips and overtime.
| Product/Service | Provider | Cost Estimation |
|---|---|---|
| Regular minimum wage (per hour) | Federal (FLSA) | $7.25 |
| Tipped cash wage minimum (per hour) | Federal (FLSA) | $2.13 |
| Regular minimum wage (per hour) | California (statewide) | $16.00 |
| Tipped cash wage minimum (per hour) | California | Not allowed (no tip credit) |
| Regular minimum wage (per hour) | New York City | $16.00 |
| Tipped cash wage minimum (per hour) | New York City | $10.65 |
| Regular minimum wage (per hour) | District of Columbia | $17.50 |
| Tipped cash wage minimum (per hour) | District of Columbia | $10.00 |
| Regular minimum wage (per hour) | Washington State | $16.28 |
| Tipped cash wage minimum (per hour) | Washington State | Not allowed (no tip credit) |
Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.
For tipped employees, overtime math has an extra step. The time-and-a-half rate is based on the full applicable minimum wage (or higher base, if paid), then the lawful tip credit (if any) is subtracted to determine the additional cash due. Where no tip credit is allowed, overtime is simply 1.5 times the hourly rate. Because service-charge distributions count toward the regular rate, they can increase overtime pay calculations in weeks when those amounts are earned.
Other pay rules may apply by location. Some jurisdictions require a premium when a workday exceeds a set span, or when shifts are canceled or changed on short notice. Spread-of-hours pay exists in certain hospitality regulations, adding an extra hour at the basic minimum wage when the time between the first and last shift in a day exceeds a set threshold. Training and mandatory meetings are paid time. If a tip pool is used, it should be documented, limited to eligible roles where required, and reflected accurately on pay statements.
Understanding these elements helps restaurant teams match pay practices to the law. Base wages, tips or service charges, and overtime each follow rules that can differ by state and city. Reading pay stubs closely, tracking hours and duties, and aligning policies with current regulations reduces errors and clarifies how compensation is built across a variety of restaurant roles and schedules.
