What is the minimum hourly rate that employers must pay certain tipped employees after applying the maximum allowable tip credit?

The minimum hourly rate that employers must pay certain tipped employees, after applying the maximum allowable tip credit, is indeed $2.13. This amount reflects the federal minimum wage law pertaining to tipped employees, which allows employers to take a tip credit of up to $5.12 per hour.

Under this law, tipped employees must receive a minimum cash wage of $2.13, provided that their tips bring their total earnings up to at least the federal minimum wage of $7.25 per hour. If their tips do not cover this threshold, the employer is required to make up the difference. This structure encourages employers in the hospitality industry, such as restaurants, to hire tipped employees while ensuring that workers can still reach a livable wage through the combination of base pay and tips.

Understanding this regulation is critical for compliance with federal labor laws and helps ensure that tipped employees are fairly compensated for their work while navigating the complexities of tip credits.