⚡ What Is Tip Credit Top-Up?
Tip credit is a provision under US labor law that allows employers in industries like restaurants and hospitality to pay tipped employees a lower base wage than the standard minimum wage, with the understanding that tips will make up the difference.
While tip credit allows for a lower base wage, it’s still important to ensure that employees’ total earnings—including tips—always meet or exceed the applicable minimum wage, as required by federal and state labor laws.
The Tip Credit Top-Up feature helps with this process by calculating and applying any required minimum wage top-up amounts based on your account’s setup and the tip data you provide.
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📌 | Important Considerations for Accurate Calculations Tip Credit Top-Up is an automated calculation tool that depends entirely on your setup and data. To ensure the feature calculates as expected and helps you meet compliance requirements, it’s important to follow these setup essentials:
⚠️ | If these requirements are not set up or maintained correctly, the system may not generate the correct top-up amounts, and compliance responsibilities remain with your business. |
🔎 Why Use Tip Credit Top-Up?
Here’s how Tip Credit Top-Up can support your business:
- Save Time: Automate complex tip credit top-up calculations across all qualifying employees.
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Support Compliance Efforts: Ensure employees’ wages meet federal and state minimum wage laws with system-calculated top-ups.
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Improve Accuracy: Help reduce human errors by letting the system calculate based on your setup and data.
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Clear Pay Stubs & Reports: Easily review Min Wage Top-Up and Tip Credit breakdowns in your payroll summaries and pay stubs.
🔐 Access required
The feature Tip Credit Top-Up is only available to USA accounts with the Payroll Add-On, in States that mandate tip credit, and for weekly or biweekly payroll cycles.
Who can create and manage Tip Credit Top-Up?
- Super Administrators: Can request feature activation, assign minimum wage to positions, run payroll, and review reports.
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Team Administrators: Can assign minimum wage to positions, run payroll, and review reports if granted permission.
📋 Topics covered in this article:
- Enabling Tip Credit in Your Account
- Assigning Minimum Wage to Employee Positions
- Reviewing Tip Credit Top-Up in Payroll
📚 Related articles:
Enabling Tip Credit in Your Account
Before you can set up Tip Credit Top-Up, the feature must be enabled in your account. If you don’t see the option to assign Minimum Wage Requirements to Employee Positions, or you’re not sure if Tip Credit Top-Up is active, reach out to our Support Team. They’ll review your account and confirm if the feature is ready.
To request Tip Credit Top-Up activation:
- Email support@pushoperations.com.
- Use the subject line: Enable Tip Credit Top-Up.
- Include your account (company) name(s) and any relevant location details (especially if you operate in multiple states).
Assigning Minimum Wage to Employee Positions
Once Tip Credit Top-Up is active, the next step is to assign the correct Minimum Wage Requirement to each position. These details are used to calculate any top-up amounts needed when employees’ wages and tips fall short.
💡 | Tip: Always double-check assigned wage rates before running payroll. If rates are missing or incorrect, the system may not calculate a top-up.
To create a new position:
- Click the Employees tab.
- On the left-hand Navigation bar, click Employee Positions.
- Click Add a New Position.
- Fill in the position details.
- Under Minimum Wage Requirement, click the drop-down menu and select the applicable rate.
⚠️ | Warning: If you do not assign a Minimum Wage Requirement, the system will not calculate or apply the tip credit top-up for employees in this position.
- Once done, click Add New Position.
To update an existing position:
- Click the Employees tab.
- On the left-hand Navigation bar, click Employee Positions.
- Click Add a New Position.
- Locate the relevant position and under Edit, click the Pencil icon
- Under Minimum Wage Requirement, click the drop-down menu and select the applicable rate.
⚠️ | Warning: If you do not assign a Minimum Wage Requirement, the system will not calculate or apply the tip credit top-up for employees in this position.
- Update any other position details if applicable.
- Once done, click Update Position.
Reviewing Tip Credit Top-Up in Payroll
Once the minimum wage is assigned to your employee positions, the system is ready to calculate any required minimum wage top-ups. From there, your team can continue entering or syncing tip data as usual. When payroll is processed, the platform will automatically calculate and apply the correct top-up or tip credit amounts for qualifying employees based on their earned tips and configured wage settings.
📌 | Note: Tip data can be synced from your POS integration or entered manually under Earnings and Deductions—we recommend entering tips daily to ensure payroll calculations are accurate.
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How the calculation works: The system compares each employee’s direct earnings and recorded tips to the minimum wage assigned to their position. If the combined amount is less than the minimum wage, the system calculates and applies the Min Wage Top-Up needed to bring their pay up to the requirement. The Tip Credit amount shown is the portion of tips used in the calculation—it is not an additional earning, but a reflection of the tips applied toward meeting minimum wage. |
Once tip data is confirmed and payroll is processed (before or after it is approved in the system), you can review the calculated Min Wage Top-Up and Tip Credit amounts directly in your payroll reports and summaries.
Where to review Tip Credit Top-Up:
Payroll Summary
The Pay Run Summary will display two dedicated sections in the overview box:
- Min Wage Top Up: Shows the total amount paid by the employer to meet minimum wage requirements for the pay period.
- Tip Credit: Reflects the total amount of tips used to calculate and qualify employees for the Min Wage Top-Up. This amount is not paid to the employee, but shows what was used in the calculation.
The Pay Run Summary provides administrators with a high-level view of both the minimum wage top-up amounts and the tips applied toward minimum wage calculations.
You can review these details at any point—before payroll is approved or after it has been processed and finalized.
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To review before approval: Access the Payroll tab and open the current pay run under Notices.
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To review after approval: Go to the Payroll tab, select Payrun History, and open the relevant pay period’s Pay Run Summary.
Employee Paystubs
When employees receive a top-up, their pay stub will display two important details:
- Min Wage Top Up (Earning): This appears as a separate line item. Earnings show the dollar amount added to their pay to bring their earnings up to the applicable minimum wage.
- Other Details: This field displays the minimum wage rate assigned to the employee’s position. This rate is used to compare the employee’s total earnings (wages + tips) against the applicable minimum wage for their position and determine if a top-up is required.
Employees can clearly see both the top-up amount paid and the minimum wage rate used for the calculation on their pay stubs, ensuring full visibility into their earnings.
Administrators can also review these details at any point, either before payroll is approved or after payroll has been processed and finalized.
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To review before approval: Open the current pay run from the Payroll tab and view employee pay stub details within the Pay Run Summary.
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To review all pay stubs (without Pay Run Summary data): Use the Payroll Register report, which provides a clean view of all employee pay stubs for the selected pay period.
Employee Payroll Summary Report
The Employee Payroll Summary Report includes a dedicated column under the Earnings section called Min Wage Top-Up (Earning). This column shows the total Min Wage Top-Up paid to each employee during the selected pay period, giving administrators clear visibility into the additional amount applied to meet applicable minimum wage requirements.
Under the Other section, the report includes a column called Tip Credit Amount (Benefit), displaying the total amount of tips used to calculate and qualify employees for the Min Wage Top-Up. This amount is not paid to the employee but is shown to provide transparency into the calculation.
Alongside these details, the report provides a comprehensive breakdown of all payroll components processed for each employee, including gross pay, deductions, benefits, and government contributions.
Frequently Asked Questions About Feature Name
Have questions about managing Tip Credit Top-Up? Check out this section for quick answers to help you navigate the process
💡| Tip: Can’t find what you’re looking for? Contact our Support Team at support@pushoperations.com or utilize our AI bot Astra for quick assistance!
Q: Why don’t I see Tip Credit Top-Up entries in Earnings and Deductions before payroll is processed?
A: Tip Credit Top-Up and Tip Credit amounts are only calculated and created after you process payroll for the pay period. You won’t see them under Earnings and Deductions until payroll is run.
Q: What happens if I forget to assign a Minimum Wage Requirement to a position?
A: The system will not calculate or apply the tip credit top-up for employees in that position. Always double-check that all applicable positions have the correct minimum wage rate assigned before processing payroll.
Q: Can I override or manually adjust the system’s calculation?
A: No. The system calculates Min Wage Top-Up automatically based on your setup and data (earnings, tips, and assigned minimum wage rates). Manual overrides or adjustments are not supported. If you have concerns about the calculation, please contact our Support Team to best assist you.
Q: What should I do if Tip Credit Top-Up amounts seem incorrect?
A: First, confirm that:
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All positions have the correct minimum wage assigned.
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Tip data is fully entered and accurate for the pay period.
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The pay period has been fully processed in payroll.
If everything looks correct but you still have concerns, reach out to support@pushoperations.com for assistance.
Q: Does the Tip Credit amount appear as an earning on the pay stub?
A: No. Tip Credit is not an earning. It reflects the amount of tips used in the calculation to determine if a top-up is required. Only Min Wage Top Up appears as a paid earning on the pay stub.
Q: How do employees know that they received a top-up?
A: If employees receive a top-up, they will see a line item called Min Wage Top Up (Earning) on their pay stub. If they do not see this item for a pay period, it means that they earned more than minimum wage with their tips and other qualifying earnings.
Q: Can I run a report to see which employees received a Tip Credit Top-Up for a specific pay period?
A: Yes. You can use the Payroll Summary Report and Earnings and Deductions Report to see which employees received a Min Wage Top-Up (Earnings) in a specific pay period. The Employee Payroll Summary Report also shows a breakdown by employee.
Q: If an employee works multiple positions, how does Push calculate the Tip Credit Top-Up?
A: Push calculates Tip Credit Top-Up per position. If an employee works multiple positions, the system evaluates their wages and tips for each position separately and applies top-ups as needed.
Q: Do I need to activate Tip Credit Top-Up for each pay period?
A: No. Once the feature is enabled on your account and your setup (positions and minimum wage rates) is complete, the system will automatically calculate the top-up when payroll is processed—there’s no need to activate it manually each time.
However, it’s still important to ensure that all tip data for each pay period is entered or synced before running payroll, as the system relies on this data to calculate the correct top-up.
Q: What happens if I add or correct tip data after payroll has been processed? Can the Tip Credit Top-up be adjusted retroactively?
A: No, the tip credit and minimum wage top-up will not adjust retroactively automatically. A retroactive pay earning entry can be used to either reduce an overpayment or add an additional amount to fix the employee's pay on their next pay run.
Additional Information
If you have any questions about setting up tip credit or understanding the minimum wage top-up calculations, don't hesitate to get in touch with our Support Team at support@pushoperations.com. We're happy to assist you in ensuring accurate and compliant payroll practices.
Remember that state laws regarding tip credit can vary from federal law, and some states have stricter rules or do not allow tip credit at all. It’s your responsibility to stay informed and ensure your business complies with the laws in your state. Please refer to your state’s labor department website or official labor regulations for up-to-date details.
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