Georgia Tip Laws for Employers (2025)

 

Georgia follows the rules set by the Fair Labor Standards Act (FLSA) around tipping and minimum wage for tipped employees. It includes how tips are different from service charges and how employers must calculate tip credits. Clear communication, recordkeeping, and fair distribution are important for maintaining your team’s trust and complying with labor laws.

What counts as a tip in Georgia?

A tip must be voluntarily given in Georgia by a customer. That means they shouldn’t be forced or expected to do so by any policy or printed message. If the customer doesn’t have full control over how much to tip or who receives it, then it’s not legally a tip. It might be considered a service charge, which follows different rules.

When a customer leaves extra cash on the table or adds a tip line on a receipt, and they choose the amount, that’s a real tip. They also choose who gets it, whether that’s the server, bartender, or shared through a tip pool with other tipped employees. This money legally belongs to the employee, not the employer. Under federal law (which Georgia follows), these tips can be used toward the tip credit if the employee is properly notified.

How service charges and tips are different

A service charge is different. If your restaurant adds a mandatory charge, like for large parties or private events, that’s not a tip under federal or Georgia law. That money belongs to the restaurant, not the server.

You can share it with your staff if you want to, but you’re not required to. And your tipped workers have no legal right to that money unless you choose to give it.

There’s also a tax difference. Service charges are considered part of the sale and must be taxed as regular income. Tips, when truly voluntary, are not taxed the same way.

If you do share a service charge with staff, that amount becomes part of their cash wage and must be reported and taxed like regular pay, not as tip income.

To stay on the safe side of the law, be careful how you notify customers on receipts and menus. Saying “gratuity included” can confuse guests and create legal risk. Instead, say “suggested tip” or “tip not included” so it’s clear that tipping is up to the customer.

Who qualifies as a tipped employee?

The FLSA defines tipped employees as workers who regularly earn more than $30 per month in tips. Most restaurant roles that involve direct contact with customers, like servers, bartenders, barbacks, and bussers, fit this description. If a worker meets that $30 threshold, federal tip regulations allow you to pay them a lower cash wage, as long as tips make up the rest to meet minimum wage.

Not everyone on your team counts as a tipped employee. According to restaurant tip pooling laws, managers, supervisors, and owners never qualify, even if they help on the floor or get tipped occasionally. You also can’t include them in a tip pool or apply the tip credit to their wages.

For BOH roles (like cooks, dishwashers, or prep staff), the rules depend on how you pay. Only FOH tipped employees can be included if you’re using a tip pool and taking the tip credit. If you’re not using credit and everyone gets paid the minimum, you may include BOH workers in a voluntary tip pool.

How do tip credits work in Georgia?

Georgia’s minimum wage is $5.15 per hour. However, restaurants that earn $500,000 or more annually or are involved in interstate commerce must follow the federal minimum of $7.25. Under the FLSA, tipped employees can pay tipped employees a cash wage as low as $2.13 per hour, as long as their tips bring total hourly pay to at least $7.25. The difference, $5.12 per hour, is what’s known as the tip credit.

But if an employee’s tips fall short, you must cover the gap. That means you’ll need to raise their cash pay to make sure they still earn at least $7.25 per hour.

Let’s say a server works 30 hours a week and you pay them $2.13 per hour. That’s $63.90 in cash wages. To meet the $7.25 federal minimum, they must earn at least $217.50 total for the week. That means they need to make $153.60 in tips. If they only make $120, you must pay the $33.60 difference.

Why you should create written notices

If you plan to use tip credits, you must give team members a written notice before they start working. It’s a legal requirement under federal law, which Georgia follows for all tip-related issues. Without it, you lose the right to pay the lower cash wage of $2.13 per hour.

Your notice needs to be clear and must include three things:

1. The cash wage you’ll pay (for example, $2.13/hour)
2. The tip credit amount you plan to claim (usually $5.12/hour)
3. A description of any tip pool your restaurant uses

Failing to provide this notice puts your business at risk. If you skip it, even by mistake, you could be forced to pay back wages at the full minimum wage for every affected employee. You may also be charged liquidated damages, which means paying double the amount you owe. In some cases, you could face extra fines or legal action.

To protect your restaurant, post the notice somewhere staff can see it (like a break room or clock-in station). The poster must include the full tip credit policy. Ask employees to sign a copy as well and keep it in their personnel file.

For extra protection, take a photo of the employee standing next to the posted notice. This can be crucial if any disputes arise about wage practices.

What to know about side work and dual duties

The old 80/20 rule stated servers and bartenders must not spend over 20% of their time (or 30 continuous minutes) in side work, such as rolling silverware or restocking. Now, though, there’s no longer a hard limit on how much time a server or bartender can spend on non-tipped tasks like rolling silverware, setting tables, or restocking stations.

Instead, the FLSA now focuses on whether the task is part of the tipped occupation. If it’s directly related to the employee’s role, you can still apply for the tip credit, even if that work doesn’t directly earn tips. That includes common server duties like restocking cups, cleaning the bar, or prepping a service station.

But the tip credit cannot be used for tasks that fall outside of the employee’s tipped role, like cleaning bathrooms, doing deep kitchen prep (if not part of their usual duties), or maintenance work. These jobs are seen as a non-tipped occupation, and those hours must be paid at the full minimum wage.

Overtime rules for tipped workers

If an employee works more than 40 hours in a week in Georgia, you must pay 1.5x the minimum wage for every extra hour. This rule applies even if you’re using the tip credit and paying a lower cash wage.

$7.25 x 1.5 = $10.88 per hour

Now subtract the tip credit (which is $5.12 per hour) from the overtime rate:

$10.88 – $5.12 = $5.76 per hour

So for every overtime hour, you must pay your tipped employee at least $5.76 in cash wages, assuming they still earn enough in tips to reach or exceed the full $10.88 per hour.

What you can and can’t deduct from credit card payments

Georgia restaurant owners can deduct the actual percentage that their credit card processor charges for each transaction. So if Visa charges 1.5%, they can deduct 1.5% from the tip, nothing more.

You can’t apply a flat rate like 3% across the board unless that’s the exact fee you’re being charged. Overcharging is illegal, even if the difference seems small.

There’s another key rule: your deduction must not drop the employee’s total pay below $7.25 per hour. That includes both tips and cash wages. If it does, you’re responsible for making up the difference, and you could be held liable for back pay and penalties.

Getting tips right

Georgia may not have unique tip laws, but that doesn’t mean employers should be complacent. Being compliant with federal wage regulations is crucial for avoiding costly legal disputes. Restaurants must carefully track tip credits, overtime, and wage calculations to protect their business.

Use 7shifts’ tip management software to automate tip tracking, calculations, and distribution. Our tool lets you create fair tip pools, track cash wages against hours worked, and get accurate reporting that keeps your team paid fairly and your restaurant fully compliant.