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Pursuant to 29 U.S.C. § 203(m), employers in states that permit tip credits may pay less than the minimum wage to employees who receive tips. This is known as a “tip credit.” Under the tip credit rule, the restaurant employer takes credit for the employee’s tips to make up the difference between the reduced wage paid by the employer and the legal minimum wage. Currently, the federal minimum hourly wage for nontipped employees is $7.25. The federal tipped employee minimum wage is $2.15. 

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