Enable Tip Credit Calculations & Tipped Roles

Updated December 23, 2024 21:32

Easily manage tipped roles and streamline payroll by using 7shifts to calculate tip credits and shortages automatically. This ensures compliance with minimum wage laws and reduces manual effort. This article outlines how Admin users can enable Tip Credit Calculations and assign Tipped Roles in 7shifts. Key terms related to Tip Credits and additional resources are also provided throughout.

Resource: Tip Credits: How They Work, Calculation, Laws, and More

Prerequisites

⚠️ Availability: Tip Credit Calculations are only available for U.S.-based accounts and do not apply to certain states, including Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. Accounts set to 'Federal USA' within their Company Settings are also excluded.

⚠️ Settings: Wage-based roles must be enabled to use this feature.

⚠️ Permissions:

- Only Admins can enable the Tip Credit Calculation setting in 7shifts.
- Managers/Assistant Managers with the 'Can manage roles' permission enabled can mark a role as tipped or not when Tip Credits have been enabled.

How to Enable Tip Credit Calculations

Login to the 7shifts web app as an Admin.
Navigate to Settings > Company Settings > Labor & Compliance.
- Ensure Wage-Based Roles is enabled under "Wages & Pay."
- Click here to learn more about Wage-based roles.
Enable Tip credit calculations and scroll to the bottom to Save your changes.
Set Up Tipped Roles:
- Select Set up tipped roles.
- On the Roles settings page, toggle the Tipped Role option to enable tipped employee roles.

Key Terms

Tipped Minimum Wage: The hourly rate employers must pay tipped employees before accounting for tips. Minimums vary by state and city.
- Check your state’s minimum wage.
Wage-Based Roles: In 7shifts, this setting Allows employees to have different hourly wages for each role.
Tip Pooling: Distributes tips among staff based on distribution rules set for your restaurant, including back-of-house workers.
- Use 7shifts' Tip Pooling for pooled tips.
- For individual tips, import data from your POS system.
Tipped Role: Roles where employees earn a lower base wage, expecting tips to meet or exceed the minimum wage.
Tip Credit: The difference between the state minimum wage and an employee’s base wage, reflected in the Worked Hours and Wages report.
Tip Shortage: The amount an employer owes if tips earned don’t cover the tip credit.
- Calculated weekly (daily in Massachusetts).
Tips Earned: The total amount of tips earned by employees in tipped roles over a specified period.

RELATED ARTICLES:

Tip Credit Reporting
Running Payroll With Tip Credit Calculations