Alabama tip laws (2026)
Alabama has no state wage-hour law, so federal rules do all the work. Under the FLSA, a tipped worker can get $2.13 an hour in cash, as long as tips bring the total to $7.25. Cities and counties can't set their own minimum wage.
Alabama at a glance
Federal tip creditAlabama: $7.25 an hour minimum wage. Tipped staff can be paid $2.13 cash, with up to $5.12 counted from tips.
| State minimum wage | $7.25/hr | No state minimum wage. The federal rate applies.[1] |
|---|---|---|
| Tipped cash wage | $2.13 | Plus up to $5.12 in tips = $7.25.[1] |
| Max tip credit | $5.12 | Federal rule applies.[1][2] |
| Tip pooling | Allowed | Mandatory pools allowed.[1][2] |
| Card-fee deduction | Pro rata only | Only the tip's share of the fee.[1][2] |
| Card tip payout | Card tips are due by payday, even before the processor pays. | Pools pay out by payday, or soon after if totals aren't ready.[1] |
| Local minimum wages | None | State law blocks local rates.[3] |
Rates verified against the U.S. Department of Labor on . Rates as of . Tipped totals are worked out from the rates above. Download this data (CSV)
How Alabama works
No state wage law, so federal rules run the show
Alabama's labor agency says the state has no wage-hour law and sends wage questions to the U.S. Labor Department. The one state rule that matters here blocks local minimum wages.[2][4][5][1]
What Alabama sets
- No state minimum wage
- No state tip-credit or tip-pool rules
- A 2016 ban on local wage and benefit mandates
What federal law sets
- $7.25 minimum wage
- $2.13 tipped cash wage, up to $5.12 tip credit
- Pool, manager, card-fee and payday rules
02The yes/no sheet
Can you do this in Alabama?
In Alabama you can take the federal tip credit, can require staff to join a tip pool and can take out only the tip's share of a card fee. Each answer below carries its condition and an official source.
| Number | Can you… | Answer | The condition |
|---|---|---|---|
| 01 | Take a tip credit against minimum wage? | Yes (federal) | Federal rule: pay $2.13 cash and count up to $5.12 in tips.[1] |
| 02 | Make staff join a tip pool? | Yes | Federal rule. Alabama sends wage questions to the U.S. Labor Department.[1][2] |
| 03 | Include bartenders, bussers, runners and hosts? | Depends | Bartenders and bussers can share. Food runner and host: traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| 04 | Include cooks and dishwashers? | Depends | Cooks and dishwashers can join a mandatory pool only if everyone gets at least $7.25 in cash and no tip credit is taken.[1] |
| 05 | Give managers or supervisors a share? | No | Managers and supervisors can't keep workers' tips or take pool shares. They keep only tips for service they alone provide.[1] |
| 06 | Let an owner keep any of the tips? | No | An owner with 20% or more equity who actively manages counts as a manager. No employer may keep workers' tips.[1] |
| 07 | Pick your own split (hours, points or percentages)? | Depends | No federal cap on pool percentages. Eligibility, notice and minimum wage rules still apply.[1] |
| 08 | Take card processing fees out of tips? | Pro rata | Only the actual card fee on the tip can come out. It can't push pay below the required wage.[1][2] |
| 09 | Hold card tips until payday? | Deadline | Card tips are due by payday, even before the processor pays. Pools pay out by payday, or soon after if totals aren't ready.[1] |
| 10 | Cover walkouts, breakage or register shortages from tips? | No | Not from tips.[1] |
| 11 | Keep a mandatory service charge for the house? | Federal rule | A mandatory service charge is not a tip. Paid out to staff, it counts as wages and goes into the overtime rate.[1] |
| 12 | Pay tips on a payroll card? | Depends | Federal rule. Alabama sends wage questions to the U.S. Labor Department. Offer another way to get paid too.[6][2] |
03State vs federal
Alabama vs federal law
Alabama follows the federal baseline on the rules below: $7.25 minimum wage, $2.13 tipped cash wage and up to $5.12 in tip credit.
| Rule | Federal (FLSA) | Alabama | Comparison |
|---|---|---|---|
| Minimum wageFederal applies | Federal$7.25[1] | Alabama$7.25[2] | Federal applies |
| Tipped cash wageFederal applies | Federal$2.13[1] | Alabama$2.13[1][2] | Federal applies |
| Max tip creditFederal applies | Federal$5.12[1] | Alabama$5.12[1][2] | Federal applies |
| Who counts as tippedFederal applies | FederalMore than $30 a month in tips, customarily and regularly received in the occupation.[1] | AlabamaFederal test: more than $30 a month in tips, in a job where tips are customary.[1] | Federal applies |
| Managers in the poolState rule | FederalManagers/supervisors meeting the executive duties test cannot keep employees’ tips or receive from pools; they may keep only tips received directly for services they directly and solely provide. No salary-level test is used for this tip restriction.[1] | AlabamaManagers and supervisors can't keep workers' tips or take pool shares. They keep only tips for service they alone provide.[1] | State rule |
| Kitchen in the poolState rule | FederalCooks and dishwashers may join a nontraditional mandatory pool only when all workers receive a direct cash wage of at least the full federal minimum wage and no tip credit is taken; employer/managers/supervisors remain excluded. State law may be stricter.[1] | AlabamaCooks and dishwashers can join a mandatory pool only if everyone gets at least $7.25 in cash and no tip credit is taken.[1] | State rule |
| Card fees from tipsSame as federal | FederalOnly the actual proportional credit-card transaction fee may be deducted from charged tips; no deduction exceeding that fee or reducing required minimum wages; state law may forbid even that deduction.[1] | AlabamaTip's share of the fee only[1][2] | Same as federal |
| Card tip payoutState rule | FederalCharged tips due by regular payday, without waiting for processor reimbursement. Employer-administered pools fully distributed by regular payday for the workweek/pay period; if the amount/distribution cannot be determined before payroll, distribute as soon as practicable afterward.[1] | AlabamaCard tips are due by payday, even before the processor pays. Pools pay out by payday, or soon after if totals aren't ready.[1] | State rule |
| Mandatory service chargesState rule | FederalA compulsory service charge is not an FLSA tip. Amounts distributed to employees are wages that may satisfy wage obligations and must enter the regular rate for overtime. This federal wage classification does not decide contractual or state-law ownership.[1] | AlabamaA mandatory service charge is not a tip. Paid out to staff, it counts as wages and goes into the overtime rate.[1] | State rule |
| Overtime for tipped staffState rule | FederalFor covered nonexempt employees, overtime generally begins after 40 hours in a workweek. Use the full regular rate, at least the full federal minimum wage, not $2.13; the hourly tip credit is not increased for overtime. Voluntary tips above the tip credit are excluded; distributed service charges enter the regular rate.[1] | AlabamaOvertime starts after 40 hours a week, figured from at least $7.25, not $2.13. The tip credit stays the same. Paid-out service charges count.[1] | State rule |
Every state starts from the same federal floor. Federal tip law baseline: the FLSA rules, rates and sources, and how Alabama fits among the four tip credit classes.
04Wages
Minimum wage and the tip credit in Alabama
Alabama has no tipped wage of its own, so the federal rule applies: $2.13 cash, up to $5.12 from tips, $7.25 in total.[2][1]
One server, one slow 30-hour week in Alabama
A busy week with $153.60 or more in tips needs no top-up. Every tip above that is the server's. Fictional worker and tips.
- Tip credit conditions
- Give the federal tip-credit notice first. Cash wage plus tips must reach minimum wage and overtime each week, or the employer pays the gap.[1]
- Who counts as tipped
- Federal test: more than $30 a month in tips, in a job where tips are customary.[1]
- Overtime
- Overtime starts after 40 hours a week, figured from at least $7.25, not $2.13. The tip credit stays the same. Paid-out service charges count.[1]
Other rates
| Rate | Hourly |
|---|---|
| Youth or training Federal youth opportunity wageUnder 20, first 90 consecutive calendar days after initial employment; nondisplacement limits apply.[9] | $4.25 |
Scheduled increases
No statewide increase with a published amount is on file as of .
06Tip pool
Who can be in the tip pool in Alabama
Alabama allows tip pools, and employers can make them mandatory. Owners, managers and supervisors can't share in them. A tip pool collects tips and splits them among staff; a tip-out is one worker handing part of their tips to others.
| Role | Can share? | Condition |
|---|---|---|
| Front of house | ||
| Server | Allowed | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Bartender | Allowed | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Busser | Allowed | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Food runner | Depends | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Host | Depends | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Barback | Depends | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Expo | Depends | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Back of house | ||
| Cook | Depends | Only in a pool where everyone gets at least $7.25 in cash and no tip credit is taken. No managers.[1] |
| Dishwasher | Depends | Only in a pool where everyone gets at least $7.25 in cash and no tip credit is taken. No managers.[1] |
| Leadership | ||
| Shift lead | Depends | Traditional pools are for jobs that usually get tips. Non-tipped roles need full minimum wage with no tip credit. No managers.[1] |
| Manager or supervisor | Not allowed | Cannot receive employees’ pooled tips. Actual ownership and management duties determine the restriction.[1] |
| Owner | Not allowed | Cannot receive employees’ pooled tips. Actual ownership and management duties determine the restriction.[1] |
- Managers and supervisors
- Managers and supervisors can't keep workers' tips or take pool shares. They keep only tips for service they alone provide.[1]
- Owners
- An owner with 20% or more equity who actively manages counts as a manager. No employer may keep workers' tips.[1]
- Back of house
- Cooks and dishwashers can join a mandatory pool only if everyone gets at least $7.25 in cash and no tip credit is taken.[1]
- Who sets the percentages
- The employer can set a mandatory pool. With a tip credit, it must tell workers how much they have to contribute.[1]
- Cap on what a pool can take
- No federal cap on pool percentages. Eligibility, notice and minimum wage rules still apply.[1]
07Put it to work
Setting up a tip pool in Alabama
Under Alabama rules, 6 of the 10 staff in this example can share a $1,200 pool. The table splits the same pool by percentage, by points and by hours.
| Who | By % | By points | By hours |
|---|---|---|---|
| Maya | $268.29 | $250.00 | $211.78 |
| Jordan | $268.29 | $250.00 | $211.76 |
| Priya | $268.29 | $250.00 | $211.76 |
| Sam | $175.61 | $200.00 | $211.76 |
| Luis | $109.76 | $125.00 | $176.47 |
| Ava | $109.76 | $125.00 | $176.47 |
| Theo | Not in the pool. Out here: this pool includes servers paid with a tip credit. | ||
| Kim | Not in the pool. Out here: this pool includes servers paid with a tip credit. | ||
| Rafa | Not in the pool. Out here: this pool includes servers paid with a tip credit. | ||
| Dana | Not in the pool. Cannot receive employees’ pooled tips. | ||
| Total | $1,200.00 | $1,200.00 | $1,200.00 |
Fictional restaurant and staff. The guest-facing staff here are assumed to meet Alabama's condition for sharing (see who can be in the tip pool, above). Percentages and point weights are examples, not a recommendation. Shares are rounded to the cent, and any leftover cent goes to the first server. Run your own numbers in the tip pooling calculator.
Ferry Tip Manager: support pool split by hours
Servers and bartenders pay into the support pool, and Tip Manager splits it by hours worked. Each person sees their share, with no spreadsheet at close.
Who it's for Full-service restaurants that tip out bussers, runners and bar backs
08Service charges
Service charges vs tips in Alabama
Alabama has no service charge rule of its own. Under federal law a mandatory service charge is not a tip, and any part paid to staff counts as wages.
| Question | OptionalTip | MandatoryService charge |
|---|---|---|
| Who sets the amount | The guest | The business |
| Who it belongs to | The worker it was left for, or the pool | A mandatory service charge is not a tip. Paid out to staff, it counts as wages and goes into the overtime rate.[1] |
| Can it go to staff? | Yes, through the pool | Yes. Amounts paid to staff are wages, not tips.[1] |
| How it's taxed (federal) | Tip income the worker reports | Regular wages, with payroll taxes[10][11] |
| Guest notice | None needed | No state rule. Federal law sets no menu or receipt notice rule.[2] |
- Step 1Did the guest choose whether to pay it, and how much?YesIt's a tip. It belongs to staff.NoIt's a mandatory charge. Go to step 2.
- Step 2What does Alabama say?Federal ruleA mandatory service charge is not a tip. Paid out to staff, it counts as wages and goes into the overtime rate.[1]
- Step 3Check the cityNo city service charge rules on file for Alabama.
- Menu and receipt notice
- No state rule. Federal law sets no menu or receipt notice rule.[2]
- Large-party auto gratuities
- For federal tax purposes, an automatic gratuity is a service charge, not a tip, even when staff get it. The label doesn't change that.[10][11]
Local service charge rules
No local service charge rules on file for Alabama.
More on the difference: service charge vs tip.
09Card tips
Card tips in Alabama: fees and payout timing
In Alabama only the tip's share of the card processing fee can come out of a card tip. Payout deadline: card tips are due by payday, even before the processor pays. Pools pay out by payday, or soon after if totals aren't ready.
Only the actual card fee on the tip can come out. It can't push pay below the required wage.[1]
When card tips have to land
- TonightGuest adds a tip On the card, at the table.
- CloseShift is tallied The pool is split by your rules.
- DeadlineAlabama rule Card tips are due by payday, even before the processor pays. Pools pay out by payday, or soon after if totals aren't ready.[1]
- Last dayFinal pay No Alabama deadline. Federal law doesn't require instant final pay; wages are due on the regular payday.[12][2][13]
Paydays: No Alabama wage-hour law. Federal minimum wage and overtime are due on the regular payday.[1][2][13]
Paying tips on a payroll card
- Allowed?DependsFederal rule. Alabama sends wage questions to the U.S. Labor Department.[6][2]
- Worker consent needed?YesFederal rule. Alabama sends wage questions to the U.S. Labor Department.[6][2]
- Free way to get the money?Federal ruleNo state rule. Federal rule applies: no general federal free cash-withdrawal mandate identified; Regulation E requires fee disclosures. State law may require free access.[14][2]
- Must you offer another option?YesFederal rule. Alabama sends wage questions to the U.S. Labor Department.[6][2]
- Holding cash tipsState ruleNo Alabama rule. Under federal law, employer-run pools pay out on the regular payday.[1][2]
- Tips shown on the pay stubNoFederal rule. Alabama sends wage questions to the U.S. Labor Department.[15][2]
Ferry Pay: each tip share, paid out digitally
Each person's direct tips, tip outs and payable amount in one view, then paid through Ferry Pay. No cash to keep on hand for payouts. Eligibility and fees apply.
Who it's for Operators who want to stop the nightly cash run
“Since launching this card program, we've reduced our cash-carrying costs by over 66 percent”
10Records
Records and notices in Alabama
Keep each tipped worker's tips and hours on record, shift by shift. Alabama: payroll records: three years.
Alabama State
- Tip records Keep identity, hours and pay records. Tip-credit employers also track reported tips, credit taken, and hours in tipped and non-tipped work.[1][16]
- How long to keep them Payroll records: three years. Wage-calculation records: two years. Tax records follow separate rules.[16]
- Tip credit notice Required. Tell workers the cash wage, the credit amount, that credit can't exceed tips, and that tips are theirs. Pool contributions too.[1]
- Posters and forms FLSA minimum wage poster.[16]
Everywhere Federal
- Tip records Maintain employee identity, time and pay records. Tip-credit employers additionally retain tipped employee, reported tips, credit amounts and hours/earnings by tipped and nontipped occupation. No-tip-credit employers operating mandatory pools record each recipient and weekly/monthly tips. IRS daily records/reporting are separate obligations.[1]
- How long to keep them FLSA: payroll records at least three years; underlying wage-computation records two years. Tax retention is separate.[16]
- Tip credit notice Oral or written notice must state cash wage; tip credit amount; credit cannot exceed actual tips; employee retains tips except valid traditional pool; credit unavailable until informed. Traditional pool contribution amounts also disclosed.[1]
- A written pool policy Good practice, not a federal rule: who's in, how it splits, when it pays. Share it with staff. How to write one.
Think your tips were handled wrong in Alabama?
Workers in Alabama can file a tip or wage claim with the Alabama Department of Workforce (334-309-9000). Filing is free, and this page can't settle a dispute; the state can.[4][19]
Retaliation: Federal law bars punishing workers for wage complaints. Remedies can include reinstatement and lost wages.[17]
Penalties under federal law: Unpaid wages, kept tips and any tip credit taken, an equal amount in damages, and attorney fees. Other penalties depend on the violation.[13][18]
Can they take this out of my tips?
- Walkouts and dine-and-dashNot allowedEmployee tips cannot reimburse employer losses. Separate wage-deduction rules may also apply.[1]
- BreakageNot allowedEmployee tips cannot reimburse employer losses. Separate wage-deduction rules may also apply.[1]
- Register shortagesNot allowedEmployee tips cannot reimburse employer losses. Separate wage-deduction rules may also apply.[1]
- UniformsNot allowedEmployee tips cannot pay employer uniform costs. Separate wage-deduction rules may also apply.[1]
- Card processing feesAllowedOnly actual proportional card-processing fee; cannot reduce required wages; stricter state rules may apply.[1]
- A manager's shareNot allowedEmployers, managers and supervisors cannot receive employee tip-pool shares.[1]
11Law changes
What changed in Alabama tip law, and what's coming
No statewide increase with a published amount is on file for Alabama as of . Most recent change: Alabama allows an overtime-premium income-tax deduction up to $1,000 per taxpayer for 2026–2028. Tip ownership and pooling rules are unchanged ().
- ChangedAlabama allows an overtime-premium income-tax deduction up to $1,000 per taxpayer for 2026–2028. Tip ownership and pooling rules are unchanged.[20]
Key statutes
- Ala. Code 25-7-40–25-7-45; Act 2016-18, local employment-mandate preemption
- 29 U.S.C. 203(m)(2), 206,207,216; federal baseline for covered employment
- 29 CFR 531.56(e), restored occupation-based dual-jobs regulation; DOL FAB 2026-1 is enforcement guidance.
Not covered here? Ask the Alabama Department of Workforce at 334-309-9000 or on workforce.alabama.gov.
12FAQ
Alabama tip law questions
Plain answers to the 8 questions restaurant owners and staff ask most about Alabama tip law, each linked to its source.
Does Alabama have its own tipped minimum wage?
Can a restaurant keep a server's tips?
No. Federal law bars employers from keeping workers' tips. Managers and supervisors can't take a cut of the pool either.[1]
Can a restaurant require a tip pool?
Yes, among eligible workers. If cooks or dishwashers are in the pool, everyone has to get at least $7.25 an hour in cash and no tip credit can be taken.[1]
Can card processing fees come out of tips?
Only the actual fee on the tip portion, and never enough to drop pay below the required wage. Skimming extra is not allowed.[1]
When are credit card tips due?
By the regular payday. The employer can't wait for the card processor to pay out first.[1]
Can an Alabama city set a higher minimum wage?
No. A 2016 state law bars cities and counties from requiring wages or benefits beyond what state or federal law requires.[5]
Is an automatic service charge a tip?
No. A mandatory service charge is not a tip under the FLSA. Any part paid to staff counts as wages and goes into the overtime rate.[1]
Does an employee have to take a payroll card?
No. Federal guidance says an employer can't require its payroll card and has to offer at least one other way to get paid.[6]
13Compare
How Alabama compares with nearby states
Alabama borders Florida, Georgia, Mississippi and Tennessee. Florida pays a higher minimum wage than Alabama's $7.25. Running locations on both sides of a line? Each one follows its own state's rules.
Neighboring states
States with the same rules
Same tip credit class as Alabama: Federal rates apply.
- Louisiana tip laws$7.25 min wage Federal $2.13 cash wage Also runs on federal tip rules, and only the tip's share of card fees
- South Carolina tip laws$7.25 min wage Federal $2.13 cash wage Also runs on federal tip rules, and only the tip's share of card fees
- Wyoming tip laws$7.25 min wage Federal $2.13 cash wage Also runs on federal tip rules, and only the tip's share of card fees
The law decides who's in. Ferry runs the split.
See how operators set pool rules in Ferry Tip Manager and pay tips out without a cash run. Bring your own Alabama setup.
14Sources
Sources for Alabama tip laws
Every figure on this page links to one of these 20 sources: 16 for Alabama and 4 for the federal baseline. They are statutes, regulations and government agency pages, each with the date it was checked.
- 1Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA)U.S. Department of Labor · Official source · Checked Pinpoint: Tip Credit, paragraph 2; Tip Credit, paragraph 3www.dol.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa
What the source says
“An employer must pay a tipped worker at least $2.13 per hour under the FLSA.”
“the federal minimum wage, which is currently $7.25 per hour.”
“The maximum tip credit that an employer can currently claim is $5.12 per hour: ($7.25 - $2.13 direct (or cash) wage = $5.12).”
- 2Wage and Hour Info, Alabama labor agencylabor.alabama.gov · Official source · Checked Pinpoint: p. 1, opening paragraphlabor.alabama.gov/Wage_and_Hour_Info.pdf
What the source says
“Alabama does not have any state laws governing wage and hour issues.”
- 3Current indexed Alabama Code 25-7-41(b)alison.legislature.state.al.us · Official source · Checked Pinpoint: 25-7-41(b)alison.legislature.state.al.us/code-of-alabama?section=25-7-41
What the source says
“including, but not limited to, paid or unpaid leave, vacation, wage, or work schedule, that is not required by state or federal law”
- 4I have questions about pay, unpaid wages, breaks, vacation pay, FMLA, etc. - Workforce Alabamaworkforce.alabama.gov · Official source · Page updated · Checked Pinpoint: agency footer; agency headingworkforce.alabama.gov/faqs/i-have-questions-about-pay-unpaid-wages-breaks-vacation-pay-fmla-etc
What the source says
“Alabama Department of Workforce 50 North Ripley Street Montgomery, Alabama 36130 334-309-9000 © 2026 — All Rights Reserved Public Records Privacy Policy Helping Alabamians access meaningful opportunities.”
“Workforce Alabama I have questions about pay, unpaid wages, breaks, vacation pay, FMLA, etc. - Workforce Alabama Skip to content An official website of the Alabama State government.”
“334-309-9000 © 2026 — All Rights Reserved Public Records Privacy Policy Helping Alabamians access meaningful opportunities.”
- 5Enrolled HB 174, Alabama Uniform Minimum Wage and Right-to-Work Actalison.legislature.state.al.us · Official source · Page updated 2016 · Checked Pinpoint: HB 174 § 1, physical page 2alison.legislature.state.al.us/files/pdf/SearchableInstruments/2016RS/PrintFiles/HB174-Enr.pdf
What the source says
“Alabama Uniform Minimum Wage and Right-to-Work Act to retain 9 the exclusive authority of the state through the Legislature 10 to regulate collective bargaining under federal labor laws, 11 and wages, leave, and benefits provided by an employer to 12 employees, classes of employees, and”
- 6What is a payroll card?Consumer Financial Protection Bureau · Official source · Page updated · Checked Pinpoint: definition, paragraph 1; paragraph following definitionwww.consumerfinance.gov/ask-cfpb/what-is-a-payroll-card-en-401
What the source says
“A payroll card is a prepaid card arranged by an employer for the purpose of paying its employees’ wages or salary.”
“Your employer can’t require you to receive your wages on a payroll card.”
“Your employer has to offer you at least one alternative to a payroll card.”
- 7Tip Regulations under the Fair Labor Standards Act (FLSA)U.S. Department of Labor · Official source · Checked Pinpoint: Regulatory History 2020-2024, item 3www.dol.gov/agencies/whd/flsa/tips
What the source says
“a federal court vacated the revision, with the effect of reinstating the Department’s original dual jobs regulation.”
- 8Field Assistance Bulletin No. 2026-1: Withdrawal of Opinion Letters and 80/20 Guidance on Related DutiesU.S. Department of Labor · Official source · Page updated · Checked Pinpoint: p. 1, introductory paragraphs; FAB 2026-1 p. 1www.dol.gov/sites/dolgov/files/WHD/fab/fab2026-1.pdf
What the source says
“These withdrawn opinion letters and the FOH provision that implemented them should no longer be relied upon as WHD enforcement guidance.”
“regulation, subsection 531.56(e).”
- 9Fact Sheet #32: Youth Minimum Wage - Fair Labor Standards ActU.S. Department of Labor · Official source · Checked Pinpoint: youth minimum wage discussion; Opening, nondisplacementwww.dol.gov/agencies/whd/fact-sheets/32-minimum-wage-youth
What the source says
“$4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar days after initial employment.”
“The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the youth minimum wage.”
- 10Tip recordkeeping and reportingInternal Revenue Service · Official source · Checked Pinpoint: Service charges are not tips, paragraph 2; qualified tips deduction, net-income limit; tip income, Social Security/Medicarewww.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting
What the source says
“Service charges (also referred to as “auto-gratuities”), when distributed to an employee, are generally treated as wages paid by the employer to the employee rather than tips paid by the customer.”
“For self-employed individuals, the deduction may not exceed the individual’s net income (without regard to this deduction) from the trade or business in which the tips were earned.”
“These amounts are subject to federal income tax and generally are also subject to Social Security and Medicare taxes.”
- 11Revenue Ruling 2012-18Internal Revenue Service · Official source · Page updated 2012 · Checked Pinpoint: Q 1/A 1, four distinguishing factors; p. 1, ruling headingwww.irs.gov/pub/irs-drop/rr-12-18.pdf
What the source says
“compulsion; (2) the customer must have the unrestricted right to determine the amount; (3) the payment should not be the subject of negotiation or dictated by employer policy; and (4) generally, the customer has the right to determine who receives the payment.”
“Rev. Rul. 2012-18”
- 12Last PaycheckU.S. Department of Labor · Official source · Checked Pinpoint: opening paragraphwww.dol.gov/general/topic/wages/lastpaycheck
What the source says
“Employers are not required by federal law to give former employees their final paycheck immediately.”
- 13Handy Reference Guide to the Fair Labor Standards ActU.S. Department of Labor · Official source · Page updated · Checked Pinpoint: Enforcement, Litigation procedures; Enforcement Through Legal Remedies, Criminal prosecution; Basic Wage Standardswww.dol.gov/agencies/whd/compliance-assistance/handy-reference-guide-flsa
What the source says
“An employee may file a private suit to recover back wages, an equal amount in liquidated damages, plus attorney’s fees and court costs.”
“Employers who have willfully violated the law may be subject to criminal penalties, including fines and imprisonment.”
“Wages required by the FLSA are due on the regular payday for the pay period covered.”
- 14Are there fees to use a payroll card?Consumer Financial Protection Bureau · Official source · Page updated · Checked Pinpoint: CFPB fee FAQ openingwww.consumerfinance.gov/ask-cfpb/are-there-fees-to-use-a-payroll-card-en-403
What the source says
“Many state laws require that you’re able to access or withdraw your money for free, so check your state’s laws.”
“Most prepaid payroll cards charge fees to use certain card features.”
- 15Questions and Answers About the FLSA, DOL WHDU.S. Department of Labor · Official source · Checked Pinpoint: Recordkeeping and Notices, Are pay stubs required?www.dol.gov/agencies/whd/flsa/faq
What the source says
“However, the FLSA does not require an employer to provide employees pay stubs.”
- 16Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA)U.S. Department of Labor · Official source · Page updated · Checked Pinpoint: Posting, paragraph 1www.dol.gov/agencies/whd/fact-sheets/21-flsa-recordkeeping
What the source says
“Each employer shall preserve for at least three years payroll records, collective bargaining agreements, sales and purchase records.”
“Employers must display an official poster outlining the provisions of the Act, available at no cost from local offices of the Wage and Hour Division and toll-free, by calling 1-866-4USWage (1-866-487-9243).”
“Records on which wage computations are based should be retained for two years,”
- 17Fact Sheet # 77 A: Prohibiting Retaliation Under the Fair Labor Standards Act (FLSA)U.S. Department of Labor · Official source · Checked Pinpoint: Coverage, paragraph 1; Enforcement, remedieswww.dol.gov/agencies/whd/fact-sheets/77a-flsa-prohibiting-retaliation
What the source says
“the protection applies to all employees of an employer even in those instances in which the employee’s work and the employer are not covered by the FLSA.”
“employment, reinstatement, lost wages and an additional equal amount as liquidated damages.”
- 1829 USC 216 penaltiesOffice of the Law Revision Counsel, U.S. House · Official source · Page updated · Checked uscode.house.gov/us/usc/t29/s216
What the source says
“the sum of any tip credit taken by the employer and all such tips unlawfully kept by the employer, and in an additional equal amount as liquidated damages.”
- 19Governor announcement Department of Workforce renamegovernor.alabama.gov · Official source · Page updated · Checked Pinpoint: Opening announcementgovernor.alabama.gov/newsroom/2025/01/governor-ivey-announces-department-of-workforce-takes-shape-greg-reed-officially-assumes-helm-as-secretary
What the source says
“on February 1, 2025, the Alabama Department of Labor will officially become the Department of Workforce.”
- 20Alabama Revenue Act 2026-604 overtime deductionrevenue.alabama.gov · Official source · Page updated 2026 · Checked Pinpoint: Opening 2 sentenceswww.revenue.alabama.gov/individual-corporate/overtime-premium-deduction-act-2026-604
What the source says
“The deduction is the lesser of the actual overtime premium or a maximum annual amount of $1,000 per taxpayer.”
15Methodology
How we research these pages
Every figure on this page comes from an official source, a statute, a regulation or a government agency page, and links to it where it is used. Ferry checks the page against those sources on a schedule and logs every change.
- 1
Official sources only
Statutes, regulations, state labor agencies, city ordinances and the U.S. Department of Labor. No vendor blogs, no AI answers, no secondary summaries as the only source.
- 2
Every figure is linked
Each rate and rule carries a numbered link to the statute or agency page behind it, with the exact pinpoint and, where available, a link that opens at the sentence itself.
- 3
Re-checked on a schedule
Every page is re-checked each January and July, and whenever a state or city changes a rate. Cash wage plus tip credit is checked against the minimum wage on every build.
- 4
Gaps are left out, not guessed
If a rule can't be confirmed from an official source, it isn't shown. The page points to the state agency instead.
What changed on this page
- First version of this page. Every figure was checked against the official sources listed on this page.
Researched by Ferry's tip operations research team. Last reviewed .
Changes to the law itself are listed in What changed and what's coming.
16Every state
Tip laws in every state
Pick any state for its tip credit, tip pool, service charge and card tip rules. Each chip shows the state's tip credit class.
- No tip creditNo tip credit
- Above $2.13Tip credit, cash wage above federal
- $2.13 cashTip credit, federal cash wage
- FederalFederal rates apply
51 of 51 state pages. Open the master guide for the federal baseline, tip credit classes and the full comparison table.