Pennsylvania Minimum-Wage and Tip-Credit Rules: What Hospitality Workers Need to Know

Pennsylvania Minimum-Wage and Tip-Credit Rules: Key Takeaways

Employers may pay tipped hospitality workers a base wage of $2.83/hour if employees earn at least $135 in tips monthly.
Total earnings (wage plus tips) must meet or exceed Pennsylvania’s $7.25 minimum wage; employers must cover deficits.
Tip pooling can include employees who regularly receive tips; managers cannot participate but may voluntarily tip.

Understanding Pennsylvania's updated minimum wage and tip-credit rules is crucial for hospitality employees. These regulations impact wages, tips, and employer responsibilities.

This guide explains what hospitality workers and employers must know about tip credits, pooling, and wage protections under Pennsylvania law.

1. Overview of Pennsylvania Minimum-Wage and Tip-Credit Rules for Hospitality

As of August 5, 2022, Pennsylvania revised its minimum wage and tip-credit regulations affecting hospitality workers such as servers, bartenders, and other tipped employees.

Employers looking to hire bartenders will find guidance helpful in understanding wage and tip laws to offer competitive compensation and remain compliant, as detailed in this hire bartender guide.

The key change raised the tipping threshold: tipped employees must earn at least $135 in tips per month for employers to pay the reduced base wage of $2.83 per hour. This replaces the previous $30 tip threshold.

Employers can count tips as part of wages but must ensure that total hourly pay—in wages plus tips—equals or exceeds Pennsylvania’s $7.25 minimum wage. If it doesn’t, the employer is required to pay the difference.

2. Pennsylvania Tip-Pooling Rules for Hospitality Workers

Tip pooling is allowed but only among employees who customarily and regularly receive tips, such as servers, bartenders, and bussers.

Managers, supervisors, and employers are prohibited from participating in tip pools. However, they may choose to voluntarily contribute their own tips to the pool.

Additionally, if all employees receive at least the minimum wage without tip credits, tip pools may legally include non-tipped staff.

For more info about bussers participating in tip pools, see the detailed busser job description.

Tip Pooling Eligibility and Prohibited Participants

Eligible: Servers, bartenders, bussers - employees who regularly receive tips.
Prohibited: Managers, supervisors, owners may not take from tip pools.
Voluntary contributions by management to tip pools are permitted but not mandatory.

3. The 80/20 Rule and Its Impact on Pennsylvania Hospitality Workers

The 80/20 rule limits the amount of time tipped employees can spend performing non-tip-generating duties.

Tipped employees must spend at least 80% of their weekly work hours on tasks that directly produce tips, such as serving customers, taking orders, or bartending. Activities like cleaning bathrooms, stocking inventory, or other maintenance must not exceed 20% of their working hours.

Understanding this rule is essential for managing tipped staff efficiently; restaurant owners can review helpful advice in our restaurant owner responsibilities spotlight.

4. Protections Against Credit Card Tip Processing Fee Deductions

Pennsylvania law prohibits employers from deducting credit card or non-cash payment processing fees from employees’ tips.

When customers pay tips via credit card or other electronic methods, the entire tip amount belongs to the employee who provided the service. Employers must not reduce those tip amounts due to processing expenses.

Restaurant managers can learn methods to reduce payment processing fees effectively and protect employees' tips.

5. Service Charges Versus Tips and Transparency Requirements

Employers must clearly distinguish between automatic service charges and tips on bills or contracts presented to patrons.

Service charges or administrative fees are not considered tips and should not be shared with employees unless stated otherwise. Clear disclosure protects both employees and customers and ensures compliance with Pennsylvania regulations.

6. Employer Responsibilities Under Pennsylvania Tip-Credit Rules

Employers must notify employees if they plan to take a tip credit so employees understand the wage structure and how tips factor into their compensation.

Employers are legally required to monitor employee wages plus tips to ensure total earnings meet or exceed the state minimum wage rate of $7.25 per hour.

If tipped employees earn less than this combined minimum, the employer must pay the shortfall, preventing wage violations.

Managers seeking to improve their team can find tips on managing servers in a restaurant to foster better compliance and morale.

7. Common Questions and Clarifications for Pennsylvania Hospitality Workers

What is the minimum wage for tipped workers?

The base hourly wage can be as low as $2.83 provided that the employee earns at least $135 in monthly tips. The total (wage plus tips) must always at least equal $7.25.

Who can participate in tip pooling?

Only employees who regularly receive tips may participate. Managers or supervisors cannot share tips in the pool but may contribute their own tips voluntarily.

Are credit card processing fees deducted from my tips?

No. Employers are prohibited from deducting any credit card or non-cash payment processing fees from employees' tips.

8. Useful Resources for Hospitality Workers and Employers in Pennsylvania

Pennsylvania Minimum-Wage and Tip-Credit Rules: Conclusion

Pennsylvania’s updated regulations provide clear guidelines to protect hospitality workers' earnings while allowing employers to claim a tip credit under defined conditions.

Understanding wage bases, tip thresholds, tip pooling eligibility, and employer obligations helps employees ensure fair compensation and supports employers in compliance.

Both parties benefit from transparency and adherence to these rules, fostering a more equitable work environment in Pennsylvania’s hospitality industry.

For employers and hospitality professionals looking to deepen their knowledge, the spotlight on restaurant staff hiring strategies offers valuable insights.

01. What is the minimum base wage for tipped employees in Pennsylvania?

As of August 5, 2022, the minimum base wage for tipped employees in Pennsylvania is $2.83 per hour, provided the employee earns at least $135 in tips monthly.

02. Who is eligible to participate in tip pooling?

Only employees who regularly receive tips, such as servers, bartenders, and bussers, are allowed to participate in tip pooling. Managers and supervisors cannot participate but may voluntarily contribute their own tips.

03. What does the 80/20 rule mean for tipped employees?

The 80/20 rule requires tipped employees to spend at least 80% of their work hours doing tip-generating duties. No more than 20% of their time can be spent on non-tip-related tasks.

04. Can employers deduct credit card processing fees from tips?

No. Pennsylvania law prohibits employers from deducting any credit card or non-cash payment processing fees from employee tips.

05. What must employers do if tipped employees’ total earnings fall below minimum wage?

If tipped employees earn less than the combined minimum wage ($7.25) from wages plus tips, employers must pay the difference to comply with Pennsylvania law.