New Overtime Rates for Tipped Employees

The U.S. Department of Labor (DOL) recently revised regulations regarding tipped employees to include a requirement that an employer provide tipped employees with a specific notice as a condition of taking a tip credit under the federal wage law, the Fair Labor Standards Act (FLSA). An employer who fails to provide the notice may lose its right to any tip credit under the FLSA and be required to pay its tipped employees the full minimum wage under the FLSA.  While the regulations do not require the notice to be in writing, employers should preserve proof that they gave and the employee(s) received the notice.

The notice must inform the tipped employee(s) of the following:

  • The amount of the cash wage to be paid to the tipped employee, which must be at least $2.63 per hour in Massachusetts.
  • The additional amount by which the tipped employee's wage is increased under the FLSA on account of the "tip credit" claimed by the employer.
  • That all tips received by the tipped employee must be retained by the employee except for a valid tip pooling arrangement.
  • That the "tip credit" under the FLSA shall not apply to any employee who has not been informed of the FLSA's "tip credit" provisions.

In addition to the notice requirement, the revised regulations affect the regular and overtime rate(s) of pay for tipped employees who work more than 40 hours in a week.

To comply with the State wage law and the DOL's interpretation of FLSA requirements, Massachusetts employers must pay the following minimum rates:

Minimum Wage: $8.00 per hour
Overtime rate for non-tipped employees: $12.00 per hour
Cash wage for tipped employees who
work 40 hours or less per week:
$2.63 per hour
Cash wage for tipped employees who
work in excess of 40 hours per week:

Hours 1 through 40:
$2.88 per hour

Hours in excess of 40 (overtime):
$6.88 per hour


Please click here to view suggested compliance guidelines and a sample notice to employees.

If you need more information, please call Steve Clark in the MRA Office at (508) 303-9905 or email

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