tip wage credit
The "tip wage credit" is a legal provision allowing employers to count part of an employee's tips toward fulfilling minimum wage requirements.
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Definition
C1Labor Law
(technical, US)A provision that lets employers count a portion of an employee's tips toward the minimum wage, reducing the direct wage they must pay.
Example
- Under the tip wage credit, the restaurant owner can pay servers a lower hourly rate as long as their tips make up the difference to reach the minimum wage.
C1Employment
(technical, US)A legal allowance enabling employers to offset part of their minimum wage obligation with the tips received by employees.
Example
- The tip wage credit is commonly used in the hospitality industry to manage payroll costs.