Do You Earn Tips At Your Job? The Rules Have Changed … For The Better

PA’s Minimum Wage Act is updated for the first time since 1977.


After 45 years — two-and-a-half of them marred by a global pandemic  — tipped and overtime employees are finally catching a break.

On Aug. 5, the Pennsylvania Department of Labor & Industry changed the commonwealth’s Minimum Wage Act in an effort to protect the wages of thousands of workers. These regulations have not been updated since 1977.

The changes, approved in March by the Independent Regulatory Review Commission and state Attorney General Josh Shapiro’s office, affect how employers pay tipped workers and ensure that salaried employees with fluctuating job schedules receive proper overtime compensation. 

 “As a former service industry worker, I have seen firsthand how employees can be taken advantage of due to outdated rules and regulations when it comes to how they are paid,” Jennifer Berrier, department secretary said in a press release. “Servers, bartenders, hairstylists, nail techs, bellhops and dozens of other tipped-worker positions rely on the generosity of their customers for their livelihood and deserve regulatory protections that ensure these earned wages are theirs to keep. I know that struggle personally, hoping you earn enough money each shift to make ends meet. These updated regulations not only seek to keep tips in the pockets of workers who rightfully earned them, but to also ensure employers are playing by the same, fair rules.”

A complete list of new regulations is available on the labor department’s website. There are five primary areas covered:

  • The definition of “tipped employee,” adjusted for inflation, increases the amount in tips an employee must receive monthly from $30 to $135 before an employer can reduce an employee’s hourly pay from $7.25 per hour to as low as $2.83 per hour.
  • Alignment with a recent federal regulatory update governing employer tip credits to allow employers to take a tip credit under certain conditions, including that the employee spends at least 80% of their time on duties that directly generate tips, commonly known as the 80/20 rule.
  • In another move mirroring a federal regulation, there is an update to allow for tip pooling among employees but in most cases excluding managers, supervisors, and business owners.
  • A prohibition on employers deducting credit card and other non-cash payment processing transaction fees from an employee’s tip left with a credit card or other non-cash method of payment.
  • A requirement for employers to clarify that automatic service charges are not gratuities for tipped employees.

The updated regulations are part of Gov. Tom Wolf’s broader worker protection agenda, which includes efforts to raise Pennsylvania’s minimum wage to $12 an hour with a path to $15 and remove local pre-emption. 

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