New Jersey · tip credit
New Jersey tip credit (OT cash = MW×1.5)
Under N.J.S.A. 34:11-56a4(e) and N.J.A.C. 12:56-3.5, New Jersey’s 2026 tip credit is $9.87 against MW $15.92 → cash floor $6.05. When tip credit is taken, NJDOL My Work Rights pays OT cash at full MW×1½ with no tip credit on OT hours (2026: $23.88). Restaurants are covered; hotels are state-OT exempt. Weekly 40 only. Not NY CR146. Not HI MW+$7. Not FLSA $2.13.
How N.J.S.A. 34:11-56a4 / N.J.A.C. 12:56-3.5 pays
N.J.S.A. 34:11-56a4(e) entitles an employer of an employee who customarily and regularly receives gratuities or tips to a tip credit against the hourly wage that would otherwise be paid — $9.87 per hour for calendar year 2024 and subsequent years. NJDOL’s 2026 minimum-wage postcard (MW-570) and tipped-workers page peg the tipped cash wage at $6.05 against the most-employer MW of $15.92 (1 Jan 2026). Cash wages plus tips must reach the full minimum wage; the employer makes up any shortfall.
N.J.A.C. 12:56-3.5 requires advance notice of the cash wage, the tip credit claimed, tip retention / tip-pool rules, and that the credit does not apply to employees who were not informed. NJDOL’s 80/20 guidance: when related non-tipped duties exceed 20% of the week, tip credit is off for that non-tipped time (toggle on this page).
Tipped overtime (NJDOL My Work Rights): “When an employer takes a tip credit, overtime is calculated on the full minimum hourly wage, not the lower cash wage payment.” The official example pays MW × 1.5 cash for overtime hours (illustrated at a prior MW as $15.49 × 1.5 = $23.24) — tip credit is not subtracted from the OT cash rate. At the 2026 MW that is $15.92 × 1.5 = $23.88. That is the commercial pay line this page implements for restaurants.
N.J.S.A. 34:11-56a4(b)(1) states that the state overtime rate “shall not apply” to employees “employed in a hotel” (and farm labor). Restaurant tipped payroll remains covered. The hotel toggle on this page falls back to the FLSA tip-OT residual shape (RR×1.5 − tip credit) for that exempt path.
Five 10h days @ $15.92 · tips $400 → credit $9.87 → 40×$6.05 + 10×$23.88 = $480.80.
Same week · tips $100 → MW shortfall make-up (floor $15.92×50 = $796).
Tip credit off (80/20 / missing notice) → 40×$15.92 + 10×$23.88 = $875.60.
Same punches on /new-york-hospitality-tip-credit/ NYC food pay OT cash $19.85 (= $17×1.5 − $5.65) — a different statute.
Same punches on /hawaii-tip-credit/ pay OT cash under HI’s MW+$7 slide (RR×1.5 − credit).
Sources
- NJDOL My Work Rights — Tipped Workers (2026 cash $6.05; OT = full MW×1.5 example)
- N.J.S.A. 34:11-56a4 — Minimum wage; tip credit; overtime; hotel exemption
- NJDOL minimum-wage postcard MW-570 (1/26) — 2026 $15.92 / tipped cash $6.05
- NJDOL Employers’ Guide to Wage & Hour Laws (MW-91 1-26)
- NJDOL tipped-work explainer — tip credit notice / 80/20 / OT on full MW
- N.J.A.C. 12:56-3.5 — Tip credit notice requirements
FAQ
What is New Jersey’s 2026 tip credit?
Most-employer MW $15.92; max tip credit $9.87 → cash floor $6.05. Employee must customarily receive more than $30/month in tips, with N.J.A.C. 12:56-3.5 notice, and cash + tips must reach the full MW.
How is tipped overtime calculated?
NJDOL: OT is calculated on the full minimum wage, not the cash wage. Official example pays MW×1.5 cash for OT hours — tip credit is not subtracted. 2026 OT cash at the tipped MW floor = $23.88. Weekly 40 only.
Are restaurants covered? What about hotels?
Restaurants are covered by NJ state OT. Hotels are exempt from state OT under § 56a4(b)(1); this page’s hotel toggle uses the FLSA tip-OT residual (RR×1.5 − credit).
Is this New York CR146 or Hawaii tip credit?
No. Those pages use OT cash = RR×1.5 − tip credit. New Jersey’s NJDOL example pays full MW×1.5 cash for OT. Hawaii also has an MW+$7 combined floor New Jersey does not use.
Is this the federal FLSA $2.13 tip credit?
No. FLSA cash wage $2.13 against $7.25 MW is a different federal floor. New Jersey’s 2026 cash floor is $6.05 against $15.92.
Who is covered?
Customarily tipped employees (>$30/month) with tip-credit notice. 80/20 side work, missing notice, or employer election not to take tip credit turn the credit off. Not /new-jersey-reporting-time/ (1-hour report floor).