Utah tipped wage and tip credit for restaurants: a worked example (2026)

Utah follows the federal minimum wage of 7.25 dollars an hour and allows a reduced cash wage for tipped employees. For a restaurant owner, the question is not only the number but the paperwork and the make-up rule when tips fall short. This guide, last checked in October 2026, explains the rule with a worked example. It is general information, not legal advice, and the Utah Labor Commission is the authority for current rules.

What is the tipped wage in Utah?

Utah follows the federal minimum wage of 7.25 dollars an hour. The Utah Labor Commission's wage claim page says employees who receive tips of at least 30 dollars a month may be paid a cash wage of 2.13 dollars an hour, if the cash wage and the tips together reach 7.25 dollars an hour. The U.S. Department of Labor's state table, dated July 1, 2026, lists the same figures for Utah, with a maximum tip credit of 5.12 dollars. A bill introduced in the 2026 legislative session, SB 179, proposed raising the state minimum wage to 20 dollars. It did not pass, according to a bill tracker, so Utah stays at the federal figures, but check the Labor Commission for the current rate before you set payroll.

How does the make-up rule work?

Tips count toward the minimum wage only if the total reaches it. In each pay period, add the employee's cash wage and the tips they received, and divide by the hours worked. If the result is less than 7.25 dollars an hour, you must pay the difference. Here is an example. A server works 30 hours in a week at a cash wage of 2.13 dollars, which is 63.90 dollars, and receives 120 dollars in tips. Together that is 183.90 dollars, or about 6.13 dollars an hour. The server is below 7.25 dollars, and you owe the difference of about 33.60 dollars (30 hours at 7.25 is 217.50, minus 183.90). A busy week with 300 dollars in tips would meet the minimum with no make-up.

What is "tipped employee" under the rule?

A tipped employee customarily and regularly receives tips. The Labor Commission's page refers to employees who receive at least 30 dollars a month in tips. Servers, bartenders and bussers who share tips usually qualify. Hosts and cooks generally do not, depending on the facts. Employees who spend a large share of their time on non-tipped duties may be treated differently, and federal rules limit the amount of time a tipped employee can spend on work that does not produce tips. Check with the Labor Commission or an employment attorney if your staff do mixed duties.

What notice and records do you need?

The U.S. Department of Labor's fact sheet on tipped employees says that an employer must tell tipped employees the cash wage and the amount of tip credit it claims before taking the credit. Ask the Labor Commission whether Utah adds a notice rule of its own. Keep a written notice in the employee file, and post the required wage poster. Keep payroll records of hours, cash wages, tips reported and any make-up payments, and check the Department of Labor's recordkeeping guidance for how long to keep them. Have employees report tips each pay period, and keep their reports.

Can you run a tip pool?

Federal law allows tip pooling among employees who customarily receive tips, and it bars owners and managers from taking part. If you take a tip credit, the pool cannot include cooks and dishwashers. If you pay the full minimum wage and take no tip credit, federal law allows a pool that includes back-of-house staff, but not owners or managers. Mandatory service charges are not tips. They belong to your business and count as revenue, and if you give some to staff, it is wages. Write down how your pool works and tell staff in advance.

What about credit card fees on tips?

You may deduct only the actual cost of processing the tip on a credit card, under federal rules, and you must pay the tips out by the next regular payday. Keep your own credit card fee statement so that you can show the figure. Many owners choose to absorb the fee in order to keep payroll simple.

What about overtime and breaks?

Overtime is owed for hours over 40 in a week, and the overtime rate is based on the regular rate, not the cash wage alone. For a tipped employee, the tip credit reduces the pay owed, but the overtime calculation starts from the full minimum wage. Ask your payroll provider to check how overtime is calculated for tipped staff, because mistakes are common.

When should you consider paying above the minimum?

In a tight labor market a server who earns a low cash wage and variable tips may leave for a job with a higher base. Some owners pay a higher wage, remove the tip credit or share a service charge with staff. These choices affect your menu prices and your payroll, so model them before you decide. In ski towns, housing and seasonal staffing matter at least as much as the hourly rate.

More guides for your business:

• Utah food handler permits and certified food managers
• The Zion curtain in Utah: what changed and what still applies
• How to get more customers to your Utah restaurant in 2026

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