What is Tip Credit?
Using the Federal Minimum Wage Rate, MacromatiX reports all employees that are paid less than minimum wage.
For those employees whose hourly pay rate + tips / hours worked will be lower than minimum wage. The difference between this number and minimum wage will be displayed as the tip credit wage that will be due to this employee.
- A delivery driver works 30 hours during the week for $6.00/hour, and he claims $20 in tips. Minimum wage is $7.25.
- Employee Hourly Rate: ($180 +$20) / 30 = $6.66/hour
- Hourly Rate Shortage: $7.25 - $6.66 = $0.58
- In this example, $0.58 is the tip credit wage per hour. So, the additional amount that the store would have to pay the delivery driver to meet minimum wage would be $17.50 (30 hours x $0.58 = $17.50).
- The employee will essentially make $7.25/hour for their 30 hours during the week.
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