Texas Minimum Wage vs Tipped Minimum Wage

Texas Minimum Wage vs Tipped Minimum Wage: Key Takeaways

Texas minimum wage is $7.25 per hour, matching the federal minimum wage.
Tipped employees in Texas can be paid a cash wage as low as $2.13 per hour, with a tip credit up to $5.12 per hour.
Employers must ensure that tips plus cash wages meet at least $7.25 per hour and notify employees about tip credit rules.

The distinction between Texas minimum wage and tipped minimum wage creates specific pay rules for tipped workers.

Understanding these rules is essential for employers and employees to ensure fair wage practices and compliance with labor laws.

For a role-specific overview, see server minimum wage guidance.

1. Understanding Texas Minimum Wage

Texas follows the federal minimum wage set by the Fair Labor Standards Act (FLSA), currently at $7.25 per hour.

This rate applies to most non-exempt employees working in the state, including those in retail, office jobs, and manual labor.

The $7.25 standard has been in effect since 2009 and has not been increased by either the federal government or the Texas legislature.

2. Texas Tipped Minimum Wage Explained

For employees who regularly receive tips—such as servers, bartenders, and some hospitality roles—Texas allows employers to pay a lower direct cash wage of $2.13 per hour.

Bartender job description details common tipped duties and responsibilities.

This is known as the tipped minimum wage or cash wage.

Server interview questions can help employers evaluate candidates for tipped roles.

Employers can claim a tip credit for the difference between the $7.25 standard and the $2.13 paid, which is up to $5.12 per hour.

The tip credit means employers count tips as part of the employee’s earnings to meet the required minimum wage.

Learn how to post jobs for tipped employees effectively.

Tip Credit Requirements for Texas Employers

To lawfully claim the tip credit, Texas employers must:

Notify tipped employees about the tip credit provisions before taking a credit.
Ensure the employee’s total compensation from tips plus cash wage equals at least $7.25 per hour.
Pay the difference if the sum of cash wage and tips falls below the standard minimum wage.

Roles like cocktail servers are typically tipped; see the cocktail server job description.

3. Employee Rights With Respect to Tips in Texas

Tipped employees retain the right to keep all their tips except where tip pooling is authorized.

For ownership rules, see can owners take tips.

Texas law permits tip pooling arrangements, where employees share a portion of their tips among eligible coworkers.

Tip Pooling in Texas

Tip pools can only include employees who typically and regularly receive tips, such as servers and bartenders.

Managers and supervisors cannot participate in tip pools or take any portion of employees’ tips.

To manage distributions, try this tip pooling template.

Employers may require tipped employees to contribute to a valid tip pool as a condition of employment, as long as these rules are followed.

4. Tips on Compliance for Texas Employers

To avoid wage violations, Texas employers should:

Provide clear, written notice to all tipped employees explaining the tip credit and wage rules.
Accurately track hourly wages, tips received, and ensure legal wage minimums are met.
Keep detailed records of tip distributions and any tip pooling arrangements.
Avoid including management staff in any tip-sharing plans.

5. Municipal Minimum Wage Variations in Texas

While some cities like Austin and Houston have tried to set higher minimum wages for municipal government employees, these changes do not apply to the private sector.

Private employers and workers remain subject to the $7.25 minimum wage and tipped wage rules set by Texas state law and federal standards.

For earning expectations in tipped roles, review waitress salary data.

6. How to Learn More About Texas Minimum Wage Laws

For the most accurate and up-to-date information on Texas wage laws, visit these official resources:

Texas Minimum Wage vs Tipped Minimum Wage: Conclusion

In Texas, the minimum wage for most workers remains $7.25 per hour. Tipped employees, however, can be paid a lower cash wage of $2.13 per hour, provided their tips make up the difference to reach at least the full minimum wage.

Employers must honor these rules, properly notify employees about tip credits, and maintain fair tip distribution practices to comply with both Texas and federal law.

Understanding and following these wage regulations is essential to protecting the rights of tipped workers and avoiding legal penalties.

01. What is the minimum cash wage for tipped employees in Texas?

The minimum cash wage for tipped employees in Texas is $2.13 per hour. Employers may use a tip credit to ensure total compensation reaches the standard minimum wage of $7.25 per hour.

02. Are employers required to notify employees about tip credits in Texas?

Yes. Texas employers must notify tipped employees of tip credit rules before claiming the credit to comply with labor regulations.

03. Who can participate in a tip pool in Texas?

Only employees who regularly receive tips, like servers and bartenders, can be included in tip pools. Managers and supervisors are prohibited from participating.

04. What are the requirements for claiming a tip credit in Texas?

Employers must notify employees about the tip credit, ensure total earnings meet or exceed $7.25 per hour, and pay the difference if tips plus wages fall short.

05. Can managers or owners keep any portion of employee tips in Texas?

No. Managers, owners, and supervisors cannot keep any part of tipped employees’ earnings or participate in tip pools.