Enable Tip Credit Calculations & Tipped Roles
7shifts calculates tip credits and shortages automatically when Tip Credit Calculations are enabled and tipped roles are configured, reducing manual effort and supporting compliance with minimum wage laws.
Note: For a full overview of how tip credits work, see Tip Credits: How They Work, Calculation, Laws, and More.
Things To Know
Important: Only Admins can enable the Tip Credit Calculation setting in 7shifts. Managers and Assistant Managers with the "Can manage roles" permission can mark a role as tipped once Tip Credit Calculations are enabled.
- Tip Credit Calculations are available for U.S.-based accounts only.
- The feature doesn't apply to accounts in Alaska, California, Minnesota, Montana, Nevada, Oregon, or Washington.
- Accounts set to Federal USA in Company Settings are also excluded.
- Wage-Based Roles must be enabled before you can turn on Tip Credit Calculations.
- Tip Credit Calculations do not require 7shifts Tip Pooling, but they do require a tip source that sends tip data directly to 7shifts (i.e., a POS integration). Tip Credit Calculations are not supported if tips are calculated outside of 7shifts (i.e., TipHaus).
How to enable tip credit calculations
- Log in to the 7shifts web app as an Admin.
- Navigate to Settings > Company Settings > Labor & Compliance.
- Under Wages & Pay, confirm that Wage-Based Roles is enabled. To learn more, see Wage-Based Roles.
- Enable Tip credit calculations.
- Scroll to the bottom and select Save.
How to set up tipped roles
- After enabling Tip Credit Calculations, select Set up tipped roles.
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On the Roles settings page, toggle the Tipped Role option on for each applicable role.
Key terms
- Tipped minimum wage: The hourly rate employers must pay tipped employees before tips are counted. Minimums vary by state and city. Check your state's minimum wage.
- Wage-Based Roles: A 7shifts setting that allows employees to have different hourly wages for each role.
- Tipped role: A role where an employee earns a lower base wage, with tips expected to bring total earnings to or above minimum wage.
- Tip credit: The difference between the state minimum wage and an employee's base wage. This amount appears in the Worked Hours and Wages report.
- Tip shortage: The amount an employer owes when tips earned don't cover the tip credit. Calculated weekly in most states, and daily in Massachusetts.
- Tips earned: The total tips earned by employees in tipped roles over a specified period.
- Tip pooling: A distribution method that shares tips among staff based on rules set for your restaurant, including back-of-house workers. Use 7shifts' Tip Pooling feature for pooled tips. For individual tips, import data from your POS system.
Next steps
Once Tip Credit Calculations are enabled and tipped roles are configured, run a payroll to see tip credits and shortages calculated automatically in the Worked Hours and Wages report.