RESTAURANT / FREE OPERATOR TOOLS
Tipped Employee Overtime Calculator
The overtime cash wage for servers and bartenders when the employer takes a tip credit, worked out from the full minimum wage, not the $2.13 cash wage.
Default numbers are an example, not industry data.
Formula
Tip credit = max(0, minimum wage − cash wage); regular rate = cash wage + credit. OT cash rate = 1.5 × regular rate − credit. Straight-time cash = min(hours, threshold) × cash wage; OT cash = max(0, hours − threshold) × OT cash rate. Tips needed = credit × all hours. Wrong method = 1.5 × cash wage; shortfall = rate difference × OT hours.
How it works
This calculator assumes the tip credit equals the minimum wage minus the cash wage, as in the first two DOL overtime examples. In DOL's third example the employer pays a higher cash wage and still claims the maximum credit, so the regular rate is above the minimum wage; that case is not modelled. The credit cannot exceed the tips actually received or the legal maximum. If tips fall short, the employer must make up the difference; this calculator flags it but does not add that payment.
Default numbers are illustrative. Use your own records and matching units throughout.
Worked example
Tip credit 7.25 − 2.13 = 5.12. OT cash rate = 7.25 × 1.5 − 5.12 = 5.755/h. Straight time 40 × 2.13 = 85.20; OT 10 × 5.755 = 57.55; total cash wages 142.75. Tips needed to cover the credit 5.12 × 50 = 256.00 (400 received ✓). Total incl. tips 542.75. The wrong method (1.5 × 2.13 = 3.195/h) underpays 2.56 per OT hour, or 25.60 for the week.
Sources
Frequently asked questions
Do tipped employees get overtime?
Under the FLSA, covered nonexempt tipped employees receive overtime based on the full regular rate.
Why isn't overtime 1.5 × $2.13?
The overtime premium uses the full regular rate, then subtracts the modelled tip credit. DOL displays 5.75 after rounding 10.875 down to 10.87; this calculator retains the exact 5.755.
Can the tip credit be bigger in overtime hours?
The ordinary tip credit cannot exceed the straight-time credit. Fact Sheet #15 notes that an additional overtime tip credit may apply in certain circumstances; this model does not calculate that.
What if my state doesn't allow a tip credit?
Enter cash wage equal to minimum wage. Use the more protective applicable state or local rules. Service charges are not tips.
Are my inputs saved or uploaded?
Calculations run in your browser. Inputs are not uploaded by the calculator. Sharing puts the inputs in a readable URL; anyone with that link can see them.