Vermont's tipped wage is exactly 50% of the state minimum, with no employer tip credit.
Vermont law permits employers to pay certain tipped employees a cash wage of 50% of the state minimum wage, provided their combined cash wage and tips meet or exceed the full state minimum. Employers cannot retain any portion of tips, nor can they deduct credit card processing fees from employee tips. A key distinction is the $120/month tip threshold for qualification.
Vermont Tipped Wage Rule
Tipped employees in qualifying establishments may be paid 50% of the state minimum wage, provided tips bring total compensation to at least the full state minimum. Tips belong to employees.
What those rules do as a Vermont shift is created.
Teambridge automatically processes Vermont's specific tipped wage rules, ensuring compliance from the moment a shift is scheduled. This includes verifying eligibility for the sub-minimum wage and preventing impermissible deductions.
Prevents impermissible tip retention
Teambridge's system blocks any attempt by an employer to retain a portion of employee tips, ensuring 100% of tips go to the workers who earned them, in accordance with Vermont law.
Flags sub-minimum wage non-compliance
If a tipped employee's combined cash wage and tips do not meet the full state minimum wage for a pay period, Teambridge flags the discrepancy and prompts for a make-up payment to ensure compliance.
Verifies $120/month tip threshold
The system monitors employee tip earnings to confirm they meet the $120 per month threshold required for an employer to utilize the tipped wage rate, prompting adjustments if not met.
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Vermont's Tipped Employee Minimum Wage
Vermont law establishes a specific minimum wage for employees who customarily and regularly receive tips, allowing for a lower cash wage provided tips bridge the gap to the full state minimum. This rule applies to establishments such as restaurants, hotels, motels, and tourist places.
9 V.S.A. § 384(a) - "An employer may pay an employee who receives tips a wage of not less than one-half of the minimum wage established in subsection (a) of this section, provided that the employee’s tips, when added to the wages paid by the employer, equal or exceed the minimum wage established in subsection (a) of this section for all hours worked."
Code of Vermont Rules 12 030 005 § 6.2 - "An employer may not retain any portion of a gratuity or deduct any amount from a gratuity for any credit card processing fees or costs."
Cash Wage and Tip Credit Conditions
As of January 1, 2026, the state minimum wage in Vermont is $14.42 per hour. For eligible tipped employees, employers may pay a cash wage of $7.21 per hour (50% of the state minimum wage). This sub-minimum wage is permissible only if the employee's tips, when combined with the cash wage, total at least $14.42 per hour for all hours worked in a pay period. If the combined amount falls short, the employer must make up the difference. Eligibility for this tipped wage rate requires that the employee customarily and regularly receives more than $120 per month in tips.
Employee Ownership of Tips and Deductions
Vermont law explicitly states that all tips, gratuities, and service charges received by an employee belong solely to that employee. Employers are prohibited from retaining any portion of these tips, whether directly or indirectly. This includes a specific prohibition against deducting credit card processing fees or any other costs from an employee's tips. Tip pooling is permitted only among employees who customarily and regularly receive tips, and employers or managers cannot participate in tip pools.
How Teambridge handles Vermont's tipped wage rules.
Teambridge integrates Vermont's nuanced tipped wage laws directly into its platform, automating compliance checks and calculations to prevent errors and ensure fair compensation.
Automated tipped wage calculation
Teambridge automatically applies the $7.21/hour cash wage for eligible tipped employees and tracks tips received to ensure the combined rate meets the $14.42/hour state minimum, flagging any shortfalls for employer action.
Continuous tip threshold monitoring
The system monitors each employee's tip earnings to verify they meet the $120 per month customary tip threshold, adjusting wage calculations if an employee falls below this requirement.
Ensured tip ownership and integrity
Teambridge prevents any employer deductions from tips, including credit card fees, and ensures that all reported tips are directed to the employees, maintaining compliance with Vermont's strict tip ownership laws.
Comprehensive compliance reporting
Detailed reports are generated, showing cash wages paid, tips received, and any necessary make-up payments, providing a clear audit trail for Vermont Department of Labor inquiries.
People also ask.
What is the cash wage for tipped employees in Vermont?
As of January 1, 2026, the cash wage for eligible tipped employees in Vermont is $7.21 per hour. This is 50% of the state's full minimum wage of $14.42 per hour.
What is the tip threshold for tipped employees in Vermont?
To be considered a "tipped employee" and eligible for the sub-minimum cash wage, an employee must customarily and regularly receive more than $120 per month in tips.
What if an employee's tips and cash wage don't meet the full minimum wage?
If an employee's combined cash wage ($7.21/hour) and tips do not equal or exceed the full state minimum wage ($14.42/hour) for all hours worked in a pay period, the employer is legally obligated to make up the difference.
Can employers keep any portion of employee tips in Vermont?
No. Vermont law strictly prohibits employers from retaining any portion of an employee's tips, gratuities, or service charges. All tips belong to the employees who receive them.
Can employers deduct credit card processing fees from tips in Vermont?
No. Vermont law explicitly states that employers cannot deduct any amount from a gratuity for credit card processing fees or other costs. This protects the full value of tips for employees.
Are tip pools allowed in Vermont?
Yes, tip pooling is permitted in Vermont, but only among employees who customarily and regularly receive tips. Employers, managers, or supervisors are prohibited from participating in tip pools.