Arkansas's Tipped Wage: A $2.63 Cash Wage with a Lower Threshold
Arkansas law mandates a minimum cash wage of $2.63 per hour for tipped employees, allowing employers to utilize a tip credit to reach the state's higher minimum wage of $11.00 per hour. Crucially, Arkansas sets a lower tip threshold of $20 per month for an employee to be considered "tipped," making more workers eligible for this specific wage structure compared to federal standards.
Arkansas Tipped Wage Rule
Employers must pay tipped employees at least $2.63/hour in direct wages. If an employee receives $20 or more in tips monthly, the employer can take a tip credit to bridge the gap to the state minimum wage of $11.00/hour.
What those rules do as an Arkansas shift is created.
Teambridge integrates Arkansas's specific tipped wage requirements directly into the shift creation and payroll process. This ensures compliance from the moment a shift is scheduled, reducing the risk of errors and wage claims for employers operating in Arkansas.
Ensuring Minimum Cash Wage
For every hour worked by a tipped employee, Teambridge verifies that the employer's direct cash wage contribution is at least $2.63. If a shift's configured base pay falls below this, an alert is triggered, preventing non-compliant pay setups.
Monitoring Tip Credit Application
Teambridge calculates the maximum allowable tip credit ($8.37/hour) to ensure that the combination of direct wages and tips meets or exceeds the Arkansas state minimum wage of $11.00/hour. Any shortfall is flagged for employer adjustment.
Automating Tip Threshold Tracking
The system tracks an employee's monthly tip earnings. Once an employee consistently earns $20 or more in tips per month, Teambridge automatically applies the tipped wage rules, simplifying the determination of who qualifies as a tipped employee under state law.
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Arkansas's Tipped Wage Credit and Threshold
Arkansas law provides specific provisions for employees who regularly receive tips, allowing employers to pay a lower direct cash wage provided tips make up the difference to the state minimum wage. The state's definition of a "tipped employee" is distinct from federal standards.
Ark. Code Ann. § 11-4-210. Tipped employees.
(a) An employer may pay an employee engaged in an occupation in which he or she customarily and regularly receives more than twenty dollars ($20.00) per month in tips a wage of two dollars and sixty-three cents ($2.63) per hour.
(b) If the sum of the direct wages paid to a tipped employee and the tips received by the tipped employee do not at least equal the applicable minimum wage rate as set forth in § 11-4-210(a), the employer shall pay the difference to the tipped employee.
Minimum Cash Wage and Tip Credit
Under Arkansas law, specifically Ark. Code Ann. § 11-4-210, an employer is permitted to pay a direct cash wage of $2.63 per hour to employees who customarily and regularly receive tips. This cash wage is significantly lower than the standard state minimum wage of $11.00 per hour (established by Ark. Code § 11-4-201). The difference between the cash wage and the state minimum wage, which is $8.37 per hour, constitutes the maximum allowable tip credit. Employers must ensure that the combination of the direct cash wage and the tips received by the employee equals or exceeds the full state minimum wage of $11.00 per hour. If the tips do not bring the employee's total compensation up to $11.00 per hour, the employer is legally obligated to make up the difference.
Lower Tip Threshold for Qualification
A key distinction in Arkansas is the threshold for classifying an employee as "tipped." While federal law (FLSA) sets this threshold at $30 per month in tips, Arkansas law defines a tipped employee as one who customarily and regularly receives more than twenty dollars ($20.00) per month in tips. This lower threshold means that more employees in Arkansas may be subject to the tipped wage provisions compared to federal guidelines. Employers must accurately track tip income to determine if an employee meets this state-specific threshold and apply the correct wage structure accordingly. Misclassification or failure to track tips accurately can lead to wage and hour violations.
How Teambridge handles Arkansas's Tipped Wage + $20/mo Threshold.
Teambridge's compliance engine is pre-configured with Arkansas's specific tipped wage laws, automating the complex calculations and tracking necessary to ensure your business remains compliant and your employees are paid correctly.
State-Specific Tipped Wage Settings
Teambridge defaults to Arkansas's $2.63 cash wage and $11.00 minimum wage for tipped roles, automatically calculating the maximum $8.37 tip credit. This eliminates manual setup errors for new locations.
Automated Tipped Employee Identification
The system tracks reported tip income over time. Once an employee's average monthly tips exceed Arkansas's $20 threshold, Teambridge automatically flags them as a tipped employee and applies the correct wage structure, ensuring compliance without manual oversight.
Guaranteed Minimum Wage Calculation
At the end of each pay period, Teambridge aggregates an employee's direct wages and reported tips. If the total falls short of the $11.00/hour state minimum wage, the system automatically calculates and adds the necessary "tip make-up" pay to ensure full compliance.
Comprehensive Compliance Records
All tip income, cash wages, tip credits, and make-up payments are meticulously recorded and auditable within Teambridge, providing a clear trail for any state inquiries or wage audits.