Oregon minimum wage by zone and no tip credit: a guide for restaurants

Oregon has no tip credit. A restaurant, cafe or bar must pay servers, bartenders and other tipped staff the full minimum wage for their zone, and tips are on top. That is different from the majority of states, where the employer can pay a lower cash wage and count tips toward the minimum. It changes how Oregon restaurants think about labor costs, menu prices and tip pooling.

What is the minimum wage in Oregon in 2026?

Oregon has three tiers, set by where the work is done, and the rates adjust for inflation each July 1. The Bureau of Labor and Industries lists these rates for July 1, 2026, through June 30, 2027:

Tier	Where	Hourly rate
Portland metro	Inside the Metro urban growth boundary	16.80 dollars
Standard	Most of the state	15.55 dollars
Nonurban	Counties named in the law	14.55 dollars

These figures are from the Bureau of Labor and Industries' minimum wage schedule. Several websites still show the previous year's rates, so check the bureau's page before you set payroll.

How do you find your tier?

The Portland metro tier follows the Metro urban growth boundary, which cuts through Clackamas, Multnomah and Washington counties. A restaurant inside the boundary pays the metro rate, and one outside it, even in the same county, pays the standard rate. Check your address on the Metro map, not just the mailing city. The nonurban tier applies in a list of counties, mostly in eastern and southern Oregon. If you run a business in more than one place, such as a cafe and a catering kitchen, each worksite is checked on its own.

What does no tip credit mean in practice?

A server who works eight hours must be paid at least the full tier rate for those hours. Tips the guest leaves belong to the employee (or the pool) and cannot be used to meet the employer's wage obligation. Compared with states that allow a credit, the base wage bill for a front-of-house team is higher, and menu prices often reflect it. It also means the pay difference between front and back of house is smaller than in many states, which helps with the common problem of kitchen workers who earn less than servers.

Can you run a tip pool?

Oregon rules limit how a business can handle tips. Employers cannot keep any part of tips, and managers who do not serve customers should not take part in a pool. Whether back-of-house staff can share in a voluntary pool depends on how it is set up and on the employees' agreement, and the rules are detailed. Before you start or change a pool, check the Bureau of Labor and Industries guidance and an employment lawyer, and put the policy in writing. Make sure that wages for everyone in the pool already meet the minimum without tips.

What about service charges and wage surcharges?

Some Oregon restaurants add a flat charge to the check, such as a percentage meant to cover wages or health care, instead of raising menu prices. If you do, describe the charge on the menu and the website, use wording that does not suggest it is a tip, and decide in advance whether it goes to staff or to the business. If you tell customers a charge goes to staff, it must. Customers react badly to confusion, and a clear policy protects you.

How should you plan labor costs?

Labor is typically the biggest cost after food in a restaurant. Under a no-tip-credit system, the arithmetic is simple: hours times the tier rate, plus employer payroll taxes and benefits, plus Paid Leave Oregon contributions. Build a weekly labor budget as a percentage of sales and compare it with your results. Look for hours that do not earn their cost, such as an extra server on a slow weekday lunch. Consider cross-training so that one person can cover a few roles.

When do rates change?

The rate rises on July 1 each year according to the change in the consumer price index, and the Bureau of Labor and Industries announces the new rates in the spring before. Mark the date in your calendar, update your point of sale and payroll software, and tell your staff. Raise menu prices in good time if you need to, and avoid price changes that surprise regulars.

What are the penalties for getting it wrong?

Unpaid wages can lead to back pay, civil penalties and, in some cases, additional damages. A claim from one employee can spread to the whole team. Keep timecards, pay stubs and records of breaks, and review them if you open a new location or change a tier by moving. Oregon employees can file wage claims with the state, so a quick fix is better than a dispute.

What should you do next?

Confirm your tier by address. Check that payroll uses the current rate. Write your tip and service charge policy down. And plan the July 1 increase in the budget as soon as the next rate is announced. See our guide to Oregon's Fair Work Week law and our overview of taxes in Oregon for the other rules that shape labor cost.

More guides for your business:

• Oregon Fair Work Week law: does it apply to your restaurant?
• Oregon has no sales tax: the taxes a Portland restaurant still pays
• Oregon food handler card: what restaurant employers must do (2026)

More in the US guides for food businesses.