Federal law lets employers pay tipped workers $2.13 an hour as long as tips bring total pay to at least the $7.25 minimum wage. If tips fall short, the employer must make up the difference, but enforcement is weak and wage theft is common. Tipped workers face high rates of poverty and sexual harassment, since their income depends on customers' approval.
Tipping spread in the US after the Civil War, and some employers, especially railroads and restaurants, used tips in place of wages for newly freed Black workers. The Pullman Company hired thousands of Black porters on low pay that relied on tips. When Congress extended the minimum wage to restaurants in 1966, it allowed employers to count tips toward it.
Seven states, including California, Washington and Minnesota, require the full minimum wage before tips. Other places have moved to end the lower wage. Washington, D.C., voters approved Initiative 82 in 2022, but the D.C. Council scaled it back in 2025.