Kentucky requires a $2.13 cash wage for tipped workers, with employers responsible for tip makeup.
Kentucky law permits employers to pay a reduced cash wage to tipped employees, provided their combined tips and cash wage meet the federal minimum wage of $7.25 per hour. Employers must ensure this "tip credit" does not exceed the amount of tips actually received by the employee, and a minimum tip threshold of $30 per month applies to qualify for this arrangement.
Tipped Wage + Tip Makeup
Validates $2.13 cash for tipped workers + tip makeup to $7.25. $30/month tip threshold under federal standard.
What those rules do as a Kentucky shift is created.
Teambridge's engine continuously evaluates Kentucky's tipped wage regulations against every shift worked by your employees, ensuring compliance is maintained automatically and proactively.
Tip Credit Calculation
For each hour worked by a tipped employee, Teambridge calculates the difference between the $2.13 cash wage paid and the federal minimum wage of $7.25. This difference ($5.12) is the maximum tip credit that can be applied, contingent on actual tips received.
Tip Makeup Enforcement
If an employee's total tips for a pay period, when combined with their $2.13 cash wage, do not reach the $7.25 federal minimum wage per hour, Teambridge automatically flags the shortfall and ensures the employer pays the difference as a tip makeup.
$30 Tip Threshold Validation
Teambridge verifies that an employee receives at least $30 per month in tips to qualify as a "tipped employee" under federal standards, which Kentucky adopts. If this threshold is not met, the employee must be paid the full federal minimum wage of $7.25 per hour directly by the employer.
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Kentucky's tipped wage provisions incorporate federal standards for minimum cash wage and tip credit.
Kentucky law aligns with the federal Fair Labor Standards Act (FLSA) regarding tipped employees. Employers may pay a sub-minimum wage of $2.13 per hour to employees who customarily and regularly receive more than $30 per month in tips, provided that the sum of the cash wage and tips equals or exceeds the federal minimum wage of $7.25 per hour. If tips do not cover the difference, the employer must make up the shortfall.
KRS 337.275: "Every employer shall pay to each of his employees wages at a rate of not less than seven dollars and twenty-five cents ($7.25) an hour, except as otherwise provided in this section. The provisions of this section relating to tipped employees shall be construed in accordance with the federal Fair Labor Standards Act, 29 U.S.C. sec. 203(m)."
Minimum Cash Wage and Tip Credit
Under Kentucky law, an employer can take a "tip credit" against the minimum wage obligation for eligible tipped employees. The direct cash wage paid by the employer must be at least $2.13 per hour. The maximum tip credit an employer can claim is the difference between the federal minimum wage ($7.25/hour) and the direct cash wage ($2.13/hour), which is $5.12 per hour. This credit is only permissible if the employee actually receives at least that amount in tips.
Tip Makeup Requirement
If an employee's tips, when added to their $2.13 cash wage, do not reach the federal minimum wage of $7.25 per hour for all hours worked in a workweek, the employer is legally obligated to pay the difference. This ensures that all tipped employees in Kentucky earn at least the federal minimum wage when their cash wage and tips are combined. The employer must also ensure the employee meets the federal definition of a "tipped employee" by customarily and regularly receiving more than $30 per month in tips.
How Teambridge keeps Kentucky's tipped wage rules on autopilot.
Teambridge integrates Kentucky's tipped wage rules directly into your payroll and scheduling, automating compliance and eliminating manual oversight. From hourly wage calculations to tip makeup, we ensure every paycheck is compliant.
Employee Tipped Status
Designate employees as "tipped" within Teambridge. Our system automatically applies the $2.13 cash wage and monitors their tip income against the federal minimum wage requirement.
Real-Time Tip Income
Teambridge allows for seamless integration with POS systems or manual entry of tip data, providing real-time tracking of each employee's total tip earnings per pay period.
Automated Tip Makeup
At the close of each pay period, Teambridge automatically calculates if an employee's combined cash wage and tips fall below $7.25/hour. If a shortfall exists, the system adds the necessary tip makeup directly to their paycheck.
Compliance Reporting
Access detailed reports showing all tipped wage calculations, tip credits applied, and any tip makeup payments, providing a clear audit trail for Kentucky labor board inquiries.
People also ask.
What is the minimum cash wage for tipped employees in Kentucky?
In Kentucky, the minimum cash wage an employer must pay to a tipped employee is $2.13 per hour. This is consistent with federal FLSA requirements.
What is the total minimum wage for tipped employees in Kentucky?
When combining the cash wage and tips, a tipped employee in Kentucky must earn at least the federal minimum wage of $7.25 per hour. If tips do not bring the total to this amount, the employer must make up the difference.
What is the tip threshold to be considered a tipped employee in Kentucky?
To be classified as a "tipped employee" and be subject to the reduced cash wage, an employee must customarily and regularly receive more than $30 per month in tips, mirroring federal guidelines.
What happens if an employee's tips and cash wage don't meet $7.25/hour?
If an employee's total earnings from their $2.13 cash wage plus tips do not reach the federal minimum wage of $7.25 per hour for all hours worked, the employer is legally required to pay the difference, known as a tip makeup.
Does Kentucky have its own state minimum wage for tipped employees?
Kentucky law (KRS 337.275) directly references and adopts the federal Fair Labor Standards Act (FLSA) standards for tipped employees, including the $2.13 cash wage and the $7.25 overall minimum wage requirement.
Are employers required to keep records of tips received by employees?
Yes, employers are required to keep accurate records of tips received by each employee to demonstrate compliance with the tip credit and tip makeup requirements, as well as for tax purposes.