Pennsylvania Minimum Wage vs Tipped Minimum Wage

Pennsylvania Minimum Wage vs Tipped Minimum Wage: Key Takeaways

• Pennsylvania's minimum wage is $7.25 per hour as of August 2025, matching the federal minimum wage.
• Tipped employees are paid a base wage of $2.83 per hour, with the requirement that tips plus this base meet or exceed $7.25.
• Employees must earn at least $135 in tips per month to qualify as tipped employees under Pennsylvania law (effective August 2022).
• The state enforces an "80/20 rule" limiting non-tip generating duties to 20% of a tipped employee’s workweek.

Pennsylvania sets distinct minimum wage rules for tipped versus non-tipped employees to ensure fair compensation.

This article explains the differences and employer responsibilities relating to minimum wage and tipped wage laws in Pennsylvania.

For hiring support, see tipped job postings.

Understanding Pennsylvania Minimum Wage and Tipped Minimum Wage

As of August 2025, Pennsylvania maintains the federal minimum wage rate of $7.25 per hour for most employees, with no state increase set.

For broader comparisons, review wages by state.

For employees classified as tipped workers, the state allows a lower direct cash wage known as the tipped minimum wage, which is $2.83 per hour in Pennsylvania.

This tipped minimum wage is based on the assumption that tips will make up the difference between the base wage and the standard minimum wage. If the combined base wage plus tips do not total at least $7.25, employers must pay the shortfall.

Tipped Employee Criteria in Pennsylvania

To be considered a tipped employee under Pennsylvania law, an individual must earn at least $135 in tips per month. This requirement increased from $30 per month effective August 5, 2022, tightening the classification.

This classification is important because it determines whether the employer can pay the lower tipped minimum wage or must pay the full standard minimum wage.

Common tipped roles include the server job description.

The 80/20 Rule for Tipped Workers in Pennsylvania

Pennsylvania enforces the “80/20 rule” stating that tipped employees cannot spend more than 20% of their workweek performing duties that do not directly generate tips.

Direct tip-generating duties include tasks like taking orders, serving food and drinks, and processing payments. Responsibilities like preparing condiments or wrapping silverware also relate closely to tipped duties but do not themselves generate tips.

For beverage-focused roles, see the cocktail server job description.

Non-related duties, such as cleaning bathrooms, managing inventory, or scheduling, do not generate tips and must not exceed that 20% limit.

Learn more about duties in the bartender job description.

Employer Obligations for Tip Credit and Tip Pool Management in Pennsylvania

Employers utilizing the tip credit must inform employees if they plan to take this credit toward minimum wage requirements.

If tips plus the base wage fall short of $7.25 per hour during any workweek, the employer must pay the difference to ensure compliance with wage laws.

Employers are prohibited from deducting credit card or other non-cash processing fees from employee tips, ensuring workers receive the full tip amount given by customers.

To lower costs without touching tips, explore how to reduce processing fees.

Tip Pooling Rules in Pennsylvania

Tip pooling is allowed among employees who regularly and customarily receive tips.

However, managers, supervisors, and employers cannot receive tips from a tip pool, though they may voluntarily contribute their own tips. They can only accept tips directly from customers if they provide full service without assistance.

Use this practical tip pooling template to manage distributions.

For legality on ownership receiving tips, see owners taking tips.

Recordkeeping and Compliance Requirements for Pennsylvania Employers

Employers must maintain accurate records of wages, tips earned, and hours worked for all employees, especially those classified as tipped.

This tracking is essential to verify that tipped employees receive at least the full minimum wage when combining cash wages and tips.

Records also support compliance audits and protect both employer and employee rights under the law.

Tip pools often include support roles—review the busser job description.

Summary and Best Practices for Minimum Wage and Tipped Wage Compliance in Pennsylvania

Pennsylvania’s minimum wage laws provide flexibility for employers to pay tipped workers a lower base wage, but set clear standards to protect employee earnings through tip credits.

Understanding the tipped employee criteria, adherence to the 80/20 rule, and employer recordkeeping and notification responsibilities are critical components of compliance.

Employers should also ensure:

• Full payment of tips without deductions for processing fees.
• Proper tip pool administration excluding managers or owners.
• Prompt payment of any shortfall between base wage plus tips and the minimum wage.

These practices encourage fairness and minimize legal risk.

Legal Resources for Pennsylvania Minimum Wage and Tipped Wage Guidance

• Visit the Pennsylvania Department of Labor and Industry: Overtime and Tipped Worker Rules in PA for detailed info on tipped worker regulations.
• Review the Pennsylvania Department of Labor and Industry: Pennsylvania's Minimum Wage Act for statutory provisions.
• Consult the Pennsylvania Department of Labor and Industry: Minimum Wage Law for additional regulatory guidance.

Pennsylvania Minimum Wage vs Tipped Minimum Wage: Conclusion

Pennsylvania aligns with federal guidelines by enforcing a $7.25 minimum wage and permitting a $2.83 tipped minimum wage.

The law protects tipped employees by requiring full compensation through tips plus base wage, restricting non-tip generating duties, forbidding tip deductions, and specifying tip pool rules.

Employers who understand and adhere to these rules can ensure fair wages and legal compliance, creating a balanced workplace for all.