---
title: "Does My Employer Have to Explain the Tip Credit?"
description: "Yes. Before paying you $2.13 and counting tips toward the minimum wage, your employer has to tell you five things. Without that notice, no tip credit."
url: https://www.tipmaxapp.com/us/answers/does-my-employer-have-to-tell-me-about-the-tip-credit
language: en
publisher: TipMax (Entermaurs Incorporated)
date_published: 2026-09-23
last_verified: 2026-09-23
---

# Nobody ever told me I was being paid with a tip credit. Doesn’t my employer have to tell me?

**Short answer:** **Yes. Your employer has to tell you before it takes a tip credit.** DOL lists five things: your cash wage (at least $2.13), the tip credit amount (no more than $5.12), that the credit can’t exceed the tips you actually get, that you keep all your tips except for a valid tip pool, and that the credit doesn’t apply without this notice. It can be spoken or written.

## What to check

Here are the five items DOL lists, with what the notice might sound like at $2.13 an hour (illustrative wording).

| What you must be told | What it might sound like |
| --- | --- |
| 1. Your cash wage, at least $2.13 an hour | “We pay you $2.13 an hour in cash wages.” |
| 2. The tip credit amount, no more than $5.12 | “We count $5.12 an hour of your tips toward the $7.25 minimum.” |
| 3. The credit can’t be more than the tips you actually get | “If your tips don’t cover it, we make up the difference.” |
| 4. You keep all your tips, except for a valid tip pool of tipped workers | “Your tips are yours, apart from the tip pool with bussers and bartenders.” |
| 5. The credit doesn’t apply unless you were told all this | “We can’t take the tip credit unless we’ve told you these rules.” |

What’s at stake: for a 30-hour week at $2.13, the tip credit your employer counts is $153.60 ($5.12 × 30).

If your employer requires a tip pool, federal rules also say it has to tell you the required contribution amount.

**Not tax or legal advice.** The wording and hours are made up. DOL doesn’t require a particular script.

## Plain English

### What a tip credit is

Federal law lets an employer pay a tipped worker as little as $2.13 an hour in cash and count up to $5.12 an hour of the worker’s tips toward the $7.25 federal minimum wage. That $5.12 is the tip credit. If your cash wage plus tips doesn’t reach $7.25 an hour for the workweek, your employer has to make up the difference.

### The notice rule

DOL’s tipped-employee fact sheet says employers must give tipped employees the five pieces of information above before taking a tip credit. The notice can be oral or written. The federal regulation says an employer isn’t eligible to take the tip credit unless it has informed its tipped employees in advance.

DOL’s fact sheet states the result plainly: an employer that fails to provide the required information cannot take the tip credit.

### Tip pools

When an employer takes a tip credit and requires a tip pool, federal rules say the pool can include only workers who customarily and regularly receive tips, and the employer has to tell you any required contribution amount. See [Can my employer make me tip out or join a tip pool?](https://www.tipmaxapp.com/us/answers/can-my-employer-require-a-tip-pool)

### Your state may have stricter rules

DOL says some states require a higher cash wage than $2.13 or don’t allow a tip credit at all, and that your employer has to follow whichever rule protects you more. DOL keeps a [list of state labor offices](https://www.dol.gov/agencies/whd/state/contacts).

### Where to ask

DOL’s Wage and Hour Division takes calls at 1-866-487-9243. See [Is my manager allowed to do that?](https://www.tipmaxapp.com/us/answers/is-my-manager-allowed-to-do-that)

## Common mistakes

- Assuming a line on the pay stub is the same as being told all five items.
- Not keeping the offer letter, handbook page, or poster that explains your pay.
- Forgetting that the tip credit also depends on your tips actually covering it each week.

## Official sources

- [U.S. Department of Labor, Fact Sheet #15: Tipped Employees Under the FLSA (notice to tipped employees)](https://www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa)
- [29 CFR 531.59, the tip wage credit (advance notice)](https://www.ecfr.gov/current/title-29/section-531.59)
- [29 CFR 531.54(c), tip pools when an employer takes a tip credit](https://www.ecfr.gov/current/title-29/section-531.54)
- [U.S. Department of Labor, Wage and Hour Division: State Labor Offices](https://www.dol.gov/agencies/whd/state/contacts)

## Last verified

September 23, 2026. Checked DOL Fact Sheet #15 and 29 CFR 531.54 and 531.59 on eCFR (current through September 21, 2026).

**Still open:** What an employer owes if it skipped the notice depends on the facts and isn’t calculated here.

## Related

- [Why is my server paycheck so small, or even $0?](https://www.tipmaxapp.com/us/answers/server-paycheck-explained)
- [Does the tipped wage change under No Tax on Tips?](https://www.tipmaxapp.com/us/answers/tipped-minimum-wage-and-no-tax-on-tips)
- [Can my employer make me tip out or join a tip pool?](https://www.tipmaxapp.com/us/answers/can-my-employer-require-a-tip-pool)
- [How is overtime calculated when I make $2.13 an hour?](https://www.tipmaxapp.com/us/answers/overtime-for-tipped-employees)

## How TipMax helps with this

Knowing your own hours and tips each week shows whether your tips actually covered the tip credit your employer counted.

TipMax is an iPhone app for servers and bartenders that tracks tips and tip-outs and turns a restaurant menu into study flashcards.

- Log cash and card tips per shift in seconds.
- See your true hourly rate: wage plus tips.
- Weekly, monthly, and pay-period totals.

Download TipMax free: https://apps.apple.com/us/app/tipmax-study-track-earn/id6744850146

---

TipMax Answers explains public government guidance on pay and workplace rules in plain English for tipped workers. It is **not legal, tax, or accounting advice**. Rules change and local rules can add to them. Confirm with the agency linked on this page or a qualified professional. TipMax the app helps you track tips and pay; it doesn’t enforce wage law or decide disputes.