By U.S. law businesses are allowed to use tip credit by paying tipped workers from $2.13 an hour if those workers earn at least the standard minimum wage of $7.25 an hour once their tips are added in.
This does not apply to businesses in all 50 U.S. states though, as tip credit is prohibited in seven states.
U.S. States That Prohibit Tip Credit:
Minimum Hourly Wage for 2019 in States That Prohibit Tip Credits:
Minimum Hourly Wage for Tipped Employees
Large employers: $9.86, small employers (less than 500,000 in annual sales): $8.04
$8.50, and $4.00 for businesses with gross annual sales of $110,000 or less