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Special rules apply for tips received by employees.
The federal law allows you, within limits, to take a tip credit against the minimum hourly wage rate. In other words, the law allows you to presume that your tipped employees are receiving a certain level of tips each pay period, and you can reduce their cash pay accordingly. The employee must be notified that you're taking the credit. Some state laws also address tip credits, and in many cases they mirror the federal law. Click on your state on the map below to find out what your state law obligations are for tipped employees.