The “Tip Credit” in D.C., Maryland, & Virginia

There seems to be a lot of confusion over the “minimum wage” for tipped employees in and around Washington D.C. First, let me say: the minimum wage is the minimum wage. That is, most workers must be paid at least $7.25 per hour (or $8.25 per hour in D.C.). And most workers must be paid at least $10.88 per overtime hour (or $12.38 per overtime hour in D.C.).

Under certain circumstances, however, an employer may take a “tip credit” against its minimum wage or overtime obligations. The rules are somewhat complicated, but they can be summarized as two basic points. First, an employer must disclose to its employee that it is using the tip credit, and tell the employee how the tip credit works. Second, an employer must be able to show that the employee actually received in tips the amount of the tip credit that was taken. For more information on the specifics of the disclosures that must be provided, see  U.S. D.O.L. Wage & Hour Division, “Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA).”

As a quick reference, here is a chart that summarizes the: 1) minimum wage, 2) minimum overtime wage, 3) maximum tip credit, 4) minimum regular cash wage, and 5) minimum overtime cash wage — for D.C., Maryland and Virginia employees who are in fact entitled, under the law of their state, to minimum and/or overtime wages. As with any chart, it doesn’t capture every nuance of the law. But it’s a start.