Wisconsin's Tipped Wage Credit: Employers may pay $2.33 cash wage if tips make up the difference to $7.25
Wisconsin law permits employers to pay a reduced cash wage to tipped employees, provided the tips received ensure the employee's total hourly earnings meet or exceed the state's minimum wage. This "tip credit" framework requires careful tracking and a critical tip threshold of $20 per month, lower than the federal standard.
Wisconsin Tipped Wage + Tip Makeup
Validates $2.33 cash for tipped workers + tip makeup to $7.25. $20/month tip threshold (lower than federal $30).
What those rules do as a Wisconsin shift is created.
Teambridge automatically applies Wisconsin's tipped wage regulations, ensuring compliance from the moment a shift is scheduled. This includes validating the cash wage, tracking tip income, and flagging any required tip makeup to meet the minimum wage standard.
Tipped Wage Validation
For employees designated as tipped, Teambridge confirms the base cash wage is at least $2.33 per hour, as permitted under Wisconsin law, ensuring no underpayment from the outset of the shift.
Tip Makeup Calculation
At the end of each pay period, Teambridge aggregates reported tips. If an employee's combined cash wage and tips fall below the $7.25 state minimum wage, the system automatically calculates and flags the precise amount the employer must provide as tip makeup.
$20 Monthly Tip Threshold Check
Teambridge monitors an employee's average tip income. If an employee consistently fails to meet the $20 per month tip threshold, the system will flag the employee as potentially ineligible for the tipped wage credit, prompting review and potential reclassification to full minimum wage.
Deploy Wisconsin compliance for your business.
Teambridge automates the complex dance of Wisconsin's labor laws, from tipped wages to overtime, so you can focus on your business, not compliance headaches.
Wisconsin's Tipped Wage Credit and Employer Obligations
Wisconsin law allows employers to take a tip credit against the state minimum wage for certain employees who customarily and regularly receive tips. This means the employer can pay a lower direct cash wage, provided the employee's tips bring their total compensation up to at least the full state minimum wage.
Wis. Admin. Code DWD § 272.03(1)
"An employer may pay a tipped employee a cash wage lower than the minimum wage, provided that the employee receives at least $20 per month in tips and the sum of the cash wage and tips equals or exceeds the minimum wage. If the employee's tips combined with the employer's direct wages do not equal the minimum hourly wage, the employer must make up the difference."
Understanding the Tipped Employee Definition and Threshold
For an employee to be considered "tipped" under Wisconsin law, they must customarily and regularly receive more than $20 per month in tips. This threshold is notably lower than the federal standard of $30 per month. If an employee's tip income consistently falls below this $20 monthly average, they may not qualify for the tipped wage credit, and the employer would be required to pay the full state minimum wage directly.
Employer Responsibility for Tip Makeup
The core of Wisconsin's tipped wage law is the employer's ultimate responsibility to ensure that all tipped employees receive at least the full state minimum wage of $7.25 per hour when direct cash wages and tips are combined. If, at the end of a pay period, an employee's tips plus their $2.33 cash wage do not meet this $7.25 minimum, the employer must pay the difference. This "tip makeup" ensures no tipped employee earns less than the minimum wage for all hours worked.
How Teambridge navigates Wisconsin's tipped wage complexities.
Teambridge automates the intricate process of managing tipped employees in Wisconsin, ensuring compliance with the $2.33 cash wage, $20 monthly tip threshold, and mandatory tip makeup, thereby eliminating manual reconciliation errors and potential wage claims.
Designate tipped positions with specific cash wages.
Employers configure specific job roles within Teambridge as "tipped," allowing the system to automatically apply the $2.33 cash wage and associated compliance checks for employees assigned to these roles.
Collect and consolidate tip data accurately.
Teambridge integrates with POS systems or provides tools for employees to report tips, aggregating this data in real-time to monitor against the $20 monthly threshold and the $7.25 combined minimum.
Ensure every employee meets the minimum wage.
At the close of each pay period, the platform automatically calculates any shortfall between an employee's cash wage + tips and the $7.25 minimum wage, generating the exact tip makeup amount required from the employer.
Maintain robust records for compliance verification.
All tip income, cash wages, and tip makeup payments are meticulously recorded, providing a comprehensive, auditable trail to demonstrate compliance with Wisconsin's DWD regulations.
People also ask.
What is the minimum cash wage an employer can pay a tipped employee in Wisconsin?
In Wisconsin, an employer can pay a tipped employee a minimum cash wage of $2.33 per hour, provided the employee's tips, when combined with this cash wage, equal or exceed the state's minimum wage of $7.25 per hour.
What is the tip threshold for an employee to be considered "tipped" in Wisconsin?
To be considered a tipped employee under Wisconsin law, an employee must customarily and regularly receive more than $20 per month in tips. This threshold is lower than the federal standard of $30 per month.
What happens if a tipped employee's tips don't bring them up to the minimum wage?
If an employee's tips, when added to their $2.33 cash wage, do not reach the state minimum wage of $7.25 per hour, the employer is legally obligated to make up the difference. This ensures all tipped employees earn at least the full minimum wage for all hours worked.
Are employers required to keep records of tips received by employees?
Yes, employers are required to maintain accurate records of all tips received by employees, as well as the cash wages paid and any tip makeup provided. These records are essential for demonstrating compliance with Wisconsin's wage and hour laws.
Can an employer require employees to pool tips?
Yes, Wisconsin law permits tip pooling arrangements among employees who customarily and regularly receive tips. However, employees who do not customarily and regularly receive tips (e.g., dishwashers, cooks) cannot be required to participate in a tip pool.
Does Wisconsin have a higher minimum wage for tipped employees in some cities?
As of April 2026, Wisconsin does not have local ordinances that mandate a higher minimum cash wage for tipped employees than the state minimum. The $2.33 cash wage and $7.25 total minimum wage apply statewide.