In November 2021, Governor Tom Wolf’s administration proposed a new regulation that will require tipped employees to earn at least $135 a month in tips before an employer is permitted to pay the $2.83 per hour tipped rate, rather than state’s minimum wage of $7.25 an hour. Currently, in Pennsylvania, employers can pay tipped employees less than the state minimum wage if they make at least $30 a month in tips. However, it is likely this will soon change.
On March 21, 2022, Pennsylvania’s Independent Regulatory Review Commission (IRRC) approved the regulation and explained that this new threshold is necessary to reflect the changes of inflation over the past four decades when the $30 tip threshold went into effect in 1977, which was described as “woefully outdated.” Additionally, the regulation also redefines how Pennsylvania classifies who is a tipped employee. Following federal guidance, a tipped employee will be an employee who spends 80% of their time on tipped work and who is paid below the $7.25 minimum wage amount.
Following approval by the IRRC, the regulation will be submitted to the Pennsylvania Attorney General for legal review. If the attorney general approves, Pennsylvania residents will see the regulation take effect 90 days after being posted in the Pennsylvania Bulletin.