Maine and Kansas each set tip credit rules in different terms, so check each tipped timesheet against the rule for its state. Maine's tip credit may not exceed 50% of the minimum hourly wage, according to Maine Legislature. An employer that elects to use the tip credit must be able to show that the employee receives at least the minimum hourly wage when direct wages and the tip credit are combined within the established 7-day workweek, according to Maine Legislature. Kansas requires the employer to pay the difference when tips and the minimum wage combined fall below $7.25 an hour, according to Kansas Office of Revisor of Statutes. Virginia's definition of a tipped employee's wage has versions effective January 1, 2027 and July 1, 2030, according to Virginia Legislative Information System.
Key takeaways: what changes your timesheet check
- Maine: the tip credit may not exceed 50% of the minimum hourly wage, according to Maine Legislature, so that cap is the first figure to check on each Maine tipped timesheet.
- Maine: direct wages and the tip credit are combined within the established 7-day workweek, and the employer must be able to show the employee receives at least the minimum hourly wage, according to Maine Legislature.
- Kansas: when tips and the minimum wage combined fall short of $7.25 an hour, the employer must pay the employee the difference, according to Kansas Office of Revisor of Statutes, so the Kansas check needs both figures on the same approval.
- Virginia: the two headings carry different effective dates, according to Virginia Legislative Information System, so confirm which version covers the pay period before you approve it.
- Maine: tips received by a service employee "become the property of the employee and may not be shared with the employer," according to Maine Legislature, so tips should stay off the employer side of the approval.
Why tip credit rules differ by state
The three sources are separate state texts, and each one is built differently. Maine's section sets a percentage cap on the tip credit and a test across the 7-day workweek, according to Maine Legislature. Kansas's section sets a dollar threshold of $7.25 an hour in a numbered subsection, according to Kansas Office of Revisor of Statutes. Virginia's section is a definition with two versions that carry different effective dates, according to Virginia Legislative Information System.
Those structures mean a single figure should not carry from one state to another. Maine's cap is set against "the minimum hourly wage established in this section," according to Maine Legislature, so the Kansas threshold of $7.25 an hour is not the Maine number. Each state's figures belong on its own row, and the three sources should be read as separate rules rather than one blended standard.
Before opening any rule text, write down the state where each tipped employee performs the work. That note decides which section applies to the timesheet in front of you.
Maine: the 50% cap and the 7-day workweek test
Maine lets an employer treat tips as part of a service employee's wages, within a limit. The text reads that an employer "may consider tips as part of the wages of a service employee, but such a tip credit may not exceed 50% of the minimum hourly wage established in this section," according to Maine Legislature. The same sentence carries an exception for January 1, 2017 to December 31, 2017, when the minimum cash wage paid directly to a tipped service employee may not be less than $5.00 per hour. That window closed at the end of 2017, so it cannot govern a pay period that falls after it.
The workweek test is the second check. An employer who elects to use the tip credit "must inform the affected employee in advance," and must be able to show that the employee receives at least the minimum hourly wage when direct wages and the tip credit are combined within the established 7-day workweek, according to Maine Legislature. In a Maine check, combine the direct wages and the tip credit for each workweek, then compare the total with the minimum hourly wage that applied to that week.
The text also says the employer shall increase the direct wages by the difference when the employee makes a satisfactory showing that the actual tips received were less than the tip credit, according to Maine Legislature. Where that showing is made, the approval should record the higher direct wage figure for the affected week.
The minimum hourly wage schedule in the same section starts at $9.00 in 2017, reaches $10.00 in 2018, $11.00 in 2019, and $12.00 in 2020, according to Maine Legislature. The text then states that "On January 1, 2021 and each January 1st thereafter, the minimum hourly wage then in effect must be increased by the increase, if any, in the cost of living," according to Maine Legislature. Take the current minimum hourly wage from the current text at that link, because the schedule above ends with the 2020 figure.
Because the tips are the employee's property, the approval sheet should not record them as employer funds.
Kansas: the $7.25 floor when tips fall short
The cited subsection says that when tips and the minimum wage combined come to "less than $7.25 an hour," the employer "must pay the employee the difference between $7.25 an hour and the actual hourly amount received by the employee," according to Kansas Office of Revisor of Statutes. That subsection is one numbered part of the section, so read the full section at the link before approving a Kansas pay period.
The same section says that when calculating the minimum wage rate, an employer "may include tips and gratuities received by an employee if such tips and gratuities have customarily constituted part of the remuneration of the employee and if the employee concerned actually received and retained such tips and gratuities," according to Kansas Office of Revisor of Statutes. The quoted text sets two conditions: the tips must have customarily formed part of the pay, and the employee must have actually received and retained them.
The subsection compares $7.25 an hour with the actual hourly amount the employee received, which is found by combining tips and gratuities with the minimum wage the employer pays, according to Kansas Office of Revisor of Statutes. The approval therefore needs two figures for each Kansas pay period: the combined hourly amount and the $7.25 figure beside it. A combined amount at or above $7.25 an hour is outside the situation the subsection describes, so no payment of the difference is called for under that text.
A Kansas approval should show the shortfall amount with the $7.25 figure beside it, plus a note on whether the tips met both conditions before they were counted. A Kansas shortfall belongs on the Kansas row and nowhere else.
Illustrative example: a Kansas shortfall
Suppose a Kansas employee's tips and the employer's minimum wage combine to $6 an hour in one pay period. The subsection quoted above compares that amount with $7.25 an hour, so the $6 figure falls below the threshold and the employer must pay the employee the difference.
Virginia: tipped-employee wage versions through 2030
The Virginia section has two headings. They read "(Effective January 1, 2027, until July 1, 2030) Definitions; determining wage of tipped employee" and "(Effective July 1, 2030) Definitions; determining wage of tipped employee," according to Virginia Legislative Information System.
The headings name no wage amount, so the full section at the link should be read before a rate is set. The first heading runs until July 1, 2030, and the second takes effect on that date, according to Virginia Legislative Information System. Because the first version starts January 1, 2027, according to the same section, neither heading covers a pay period that falls before that date, so those periods need the full section at the link.
Both headings end with the same caption, "Definitions; determining wage of tipped employee," according to Virginia Legislative Information System. The captions match, so the effective dates in the parentheses are the detail that separates the two versions on the page. A practical sequence is to note the first and last day of each pay period, compare those days with January 1, 2027 and July 1, 2030, and then pick the heading whose dates contain them.
The heading dates decide which version covers a pay period from January 1, 2027 to July 1, 2030, but the full section is still needed for the rate. Virginia approvals should name the heading relied on in the approval note, so a later reviewer can see which version was used.
Which state rule fits your pay approval
A tipped employee's timesheet should be matched to the state where that employee works, and the matching state's row should be the one checked. When a manager approves timesheets for staff in more than one of these states, group the timesheets by state before checking, so each group meets its own row.
For Maine pay, the check covers the 50% cap, the workweek test, and the increase owed when tips fall short. For Kansas pay, the check covers the $7.25 threshold and the tip-counting conditions. For Virginia pay, the check covers which dated version the pay period falls under.
Within a Maine group, make a separate combined check for each workweek, because the 7-day workweek is the period the statute names, according to Maine Legislature. Within a Kansas group, record whether the tips met both conditions in the section, according to Kansas Office of Revisor of Statutes. Within a Virginia group, record the heading used so the date check is visible on the approval.
When an employee works in two of these states, settle the state of the work shown on the timesheet before choosing a row, and note that choice on the approval. For the wider approval steps, see timesheet approval and edit rules.
For the payroll handoff on multi-state timecards, see payroll handoff checks for multi-state timecards. For deductions taken from pay, see wage deduction checks before approval before posting any amount that reduces a tipped employee's wage.
Compare the three sources in one table
The table has one row for each cited source, and each row draws on the source named in its first cell.
| Publisher | Cited rule | Amount or dates |
|---|---|---|
| Maine Legislature | Tip credit may not exceed 50% of the minimum hourly wage; the employer must be able to show that the employee receives at least the minimum hourly wage when direct wages and the tip credit are combined within the established 7-day workweek; tips become the property of the employee and may not be shared with the employer | Minimum hourly wage of $9.00 in 2017, $10.00 in 2018, $11.00 in 2019, and $12.00 in 2020; cost-of-living increases from January 1, 2021 |
| Kansas Office of Revisor of Statutes | Employer must pay the employee the difference when tips and the minimum wage combined are less than $7.25 an hour; tips may be included when they customarily constituted part of the remuneration and the employee actually received and retained them | $7.25 an hour |
| Virginia Legislative Information System | Definitions; determining wage of tipped employee | Version effective January 1, 2027 until July 1, 2030; version effective July 1, 2030 |
The one next step is to pull last week's tipped timesheets for your state and check each one against its row in the comparison table before you approve the pay.
FAQ: tip credit questions for managers
Can Maine count tips toward more than half of the minimum hourly wage?
No. The tip credit may not exceed 50% of the minimum hourly wage, according to Maine Legislature. Record the credit on the approval as a figure no larger than that cap.
What must a Maine employer be able to show each workweek?
The employer must show that the employee receives at least the minimum hourly wage when direct wages and the tip credit are combined within the 7-day workweek, according to Maine Legislature. Keep that combined figure on each week's timesheet. The same section requires that an employer who elects the tip credit inform the affected employee in advance, so keep a record of that notice with the Maine approval.
What happens in Kansas when tips and wages fall below $7.25 an hour?
The employer must pay the employee the difference, according to Kansas Office of Revisor of Statutes. Tips count toward the minimum wage only when they customarily formed part of the employee's pay and the employee actually received and retained them, according to the same section. That answer comes from one subsection, so read the full section before you apply it.
When do the Virginia tipped-employee wage versions take effect?
One version runs from January 1, 2027 until July 1, 2030, and another takes effect July 1, 2030, according to Virginia Legislative Information System. The first heading's dates end on July 1, 2030, which is the date the second heading takes effect. Check which version a pay period falls under before choosing a row.