Georgia tipped wage and tip credit for restaurants: what applies in 2026

Georgia is one of the states where the numbers in the statute and the numbers you actually pay do not match. The state minimum wage is lower than the federal one, and the federal rule is what governs most restaurants. This guide, checked in October 2026, explains which figure applies, how the tip credit works, what to keep on file and how to avoid the common mistakes. It is general information, not legal advice. Confirm current figures with the U.S. Department of Labor and a payroll professional.

Which minimum wage applies to a Georgia restaurant?

Georgia's own law sets a state minimum of $5.15 an hour, but according to 2026 payroll guides, the federal minimum of $7.25 an hour applies to nearly every employer, because the federal Fair Labor Standards Act covers most restaurants. The state rate matters only in rare cases where an employer is not covered by federal law. In practice, plan payroll around $7.25 for non-tipped staff, and check the federal Department of Labor's site for any change.

What is the tipped wage?

Federal law lets you pay a tipped employee a cash wage of $2.13 an hour and claim a tip credit of up to $5.12 an hour, as long as the employee's tips bring total pay to at least $7.25 for each hour worked. The credit is the difference between the cash wage and the minimum, and you may take less than the maximum. The tip credit is optional. One law-firm guide notes that Georgia's own wage law exempts tipped employees, which leaves the federal rules as the only ones that apply to them.

What notice must you give?

Before taking the credit, tell each tipped employee, preferably in writing, the cash wage you will pay, the amount of the credit, that the credit cannot exceed the tips they receive, that they keep all of their tips apart from a lawful pool and that the credit will end if they do not receive enough tips. Keep a signed copy. If you cannot show the notice, the Department of Labor may treat the credit as unavailable, and you would owe the difference between the cash wage and the full minimum for every hour worked.

Keep notices in plain language, and give them in the language your employees speak best. A one-page sheet at hire, signed and dated, is easier to prove than a poster in the back hall. When you change the cash wage or the credit, issue a new notice. Store copies where a manager can find them in minutes, because a Wage and Hour investigator will often ask for them first.

How do you calculate make-up pay?

Test each workweek. Add the cash wage paid and the tips received, divide by hours worked and compare to $7.25. If the result is lower, you owe the difference. Use your own payroll system for the real figures, and review any week with unusually low tips.

How is overtime paid?

Overtime for a tipped employee is based on the full minimum wage of $7.25, not on the $2.13 cash wage, and the tip credit is then subtracted. Many businesses find that long weeks for tipped staff cost more than expected, so schedule with care. Make sure double shifts and split shifts are counted by the hour in the workweek, and not by the shift.

Run a test on a real week. Take a server who worked 45 hours, check the hours over 40 are flagged in your system, and confirm the overtime rate is built from the full minimum wage. Many payroll tools default to the cash wage unless set up correctly, and a wrong default repeats on every check until someone notices. Ask your provider to show you the formula in writing.

Who handles complaints in Georgia?

Sources disagree about how much wage enforcement the Georgia Department of Labor does. The U.S. Department of Labor's Wage and Hour Division enforces the federal rules, and employees can file complaints with it. Expect an investigator to ask for time records, pay records and tip records covering past years. Keep your records in order so that you can answer within days.

What about tip reporting?

Employees must report tips to you, usually in writing, and you must withhold taxes on them and report them to the IRS. A larger food and beverage business may also file an annual information return about tips. The separate guide on tip reporting and Form 8027 covers this. Make sure your payroll system handles the reported tips.

What should you do now?

Pick one slow week and run the numbers for each tipped employee. Check that your notices are signed, that overtime is calculated on the full minimum and that managers are not sharing tips. Ask a payroll professional to review your setup once a year, and calendar a reminder to check for rate changes each January.

If your staff includes cooks, dishwashers and hosts, check how each is paid, since non-tipped roles must receive at least the full minimum wage, and that includes any time a tipped worker spends on non-tipped jobs such as deep cleaning or inventory if it is substantial. Look at how you pay for training days and for meetings. A short audit of three or four pay stubs often shows where a rule is being missed.

More guides for your business:

• Georgia alcohol licenses and Sunday brunch hours for restaurants
• Georgia catering for offices and private events: permits and contracts
• Georgia food truck permits: mobile food units and the base of operation

More in the US guides for food businesses.