Tipped workers in North Carolina must be paid at least $2.13 in cash, with employer tip makeup to the $7.25 federal minimum wage.
North Carolina adheres to the federal standard for tipped employees, allowing employers to take a tip credit against the federal minimum wage. This means employers can pay as little as $2.13 per hour in direct wages, provided the employee's tips bring their total compensation up to $7.25 per hour. Teambridge automates the calculation and ensures compliance with this makeup requirement.
North Carolina Tipped Wage + Tip Makeup
Validates $2.13 cash for tipped workers + tip makeup to $7.25. $20/month tip threshold for tipped classification under federal standard.
What those rules do as a North Carolina shift is created.
Teambridge integrates North Carolina's tipped wage regulations directly into your payroll and scheduling workflows. Our system automatically monitors cash wages and reported tips to ensure every tipped employee meets the federal minimum wage threshold, flagging discrepancies and preventing non-compliance before it occurs.
Minimum Cash Wage Enforcement
If a shift is recorded for a tipped employee with a direct cash wage below $2.13 per hour, Teambridge will immediately block the entry and alert the manager, preventing underpayment at the point of entry.
Tip Makeup Calculation & Flag
At the close of a pay period, Teambridge calculates each tipped employee's average hourly rate (cash wage + reported tips). If this total falls below $7.25 per hour, the system automatically calculates the required tip makeup and flags it for immediate employer action, ensuring the employee receives the federal minimum wage.
Tipped Employee Classification Check
Teambridge monitors an employee's tip income over time. If an employee consistently earns less than $20 per month in tips, triggering a reclassification out of tipped status, the system will alert the employer to adjust their pay rate to the full minimum wage of $7.25 per hour, preventing misclassification.
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North Carolina allows a tip credit, requiring employers to pay a direct cash wage of at least $2.13 per hour, with tips making up the difference to the federal minimum wage of $7.25 per hour.
North Carolina law follows the federal Fair Labor Standards Act (FLSA) regarding tipped employees. Employers may take a tip credit against the minimum wage for employees who customarily and regularly receive more than $20 per month in tips. The employer must pay a direct cash wage of at least $2.13 per hour, and the combination of this direct wage and tips must equal or exceed the federal minimum wage of $7.25 per hour. If an employee's tips plus the direct wage do not meet the minimum wage, the employer must make up the difference.
Cited from: 29 U.S.C. § 203(m)(2)(A), 29 C.F.R. § 531.50, North Carolina Wage and Hour Act (NCWHA)
Tip Credit Conditions and Requirements
For an employer to utilize the tip credit, several conditions must be met. The employer must inform the employee in advance of the tip credit provisions, including the amount of the direct cash wage being paid, the amount of the tip credit, and that all tips received by the employee will be retained by the employee (except for valid tip pooling arrangements). The employee must also be allowed to retain all tips, with the exception of bona fide tip pools that include only customarily and regularly tipped employees. If an employer fails to meet these conditions, they cannot take the tip credit and must pay the full minimum wage in direct wages.
Employer Obligations for Tip Makeup
The primary responsibility for ensuring tipped employees reach the federal minimum wage rests with the employer. If, at the end of a workweek or pay period, an employee's cash wages plus tips do not average out to at least $7.25 per hour for all hours worked, the employer is legally obligated to pay the difference. This "tip makeup" must be included in the employee's regular pay and cannot be delayed or contingent on future tip earnings. Proper recordkeeping of cash wages paid, tips received, and hours worked is crucial for demonstrating compliance.
Teambridge ensures North Carolina's tipped wage compliance is seamless and automatic.
Forget manual calculations and the risk of costly errors. Teambridge’s compliance engine automatically applies North Carolina's tipped wage rules, ensuring your business stays compliant without constant oversight. Our system handles the complexities of tip credits, makeup pay, and classification thresholds, so you can focus on your operations.
Instant Cash Wage Validation
When a shift is scheduled or created for a tipped employee, Teambridge immediately verifies that the assigned direct cash wage meets or exceeds the North Carolina minimum of $2.13 per hour. Any entry below this threshold is flagged or blocked, preventing non-compliant scheduling.
Real-time Tip Reporting Integration
Upon clock-out, employees can report their tips directly within Teambridge. This data is instantly integrated with their cash wages and hours worked, providing a live calculation of their effective hourly rate for the shift.
Automated Tip Makeup Calculation
At the end of each pay period, Teambridge aggregates all cash wages and reported tips for each tipped employee. The system then automatically calculates any required tip makeup to ensure every employee reaches the $7.25 federal minimum wage, adding the necessary amount to their paycheck without manual intervention.
Continuous Tipped Classification Monitoring
Teambridge continuously monitors an employee's average monthly tip income. If an employee consistently falls below the $20/month tip threshold, the system will alert you to adjust their classification and pay them the full minimum wage, preventing inadvertent misclassification.
People also ask.
What is the minimum cash wage for tipped employees in North Carolina?
In North Carolina, the minimum direct cash wage an employer must pay a tipped employee is $2.13 per hour. This is consistent with the federal Fair Labor Standards Act (FLSA) standard.
What is the total minimum wage a tipped employee must earn in North Carolina?
When combining the direct cash wage and tips, a tipped employee in North Carolina must earn at least the federal minimum wage of $7.25 per hour for all hours worked. If tips do not bring the total to $7.25 per hour, the employer must make up the difference.
What is the tip threshold for an employee to be considered "tipped" in North Carolina?
An employee is generally considered a "tipped employee" if they customarily and regularly receive more than $20 per month in tips. This threshold allows employers to take a tip credit against the minimum wage.
What happens if an employee's tips plus cash wage don't meet the minimum wage?
If an employee's direct cash wage of $2.13 per hour plus their earned tips do not equal at least $7.25 per hour for all hours worked in a pay period, the employer is legally required to pay the difference. This is known as "tip makeup" or "tip credit makeup."
Are employers required to inform employees about the tip credit?
Yes, employers must inform their tipped employees in advance that they intend to pay less than the full minimum wage by taking a tip credit. This notification must include the direct cash wage being paid, the amount of the tip credit, and that all tips received by the employee will be retained by the employee (except for valid tip pooling arrangements).
Can employers require tipped employees to participate in a tip pool?
Yes, employers can require tipped employees to participate in a tip pool, provided that the pool includes only employees who customarily and regularly receive tips (e.g., servers, bussers, bartenders). Managers, supervisors, and non-tipped employees generally cannot participate in a mandatory tip pool.