Federal tipped minimum wage would be phased out under HR 5112

What does this do?

HR 5112 eliminates the federal tipped minimum wage, which currently allows employers to pay tipped workers as little as $2.13 per hour. The transition would begin at $3.60 per hour and increase by $1.50 each year until the tipped wage reaches the regular federal minimum wage, at which point the separate category would be eliminated. The bill also bans employers and managers from keeping any portion of tips, requires voluntary tip-pooling arrangements, and mandates disclosure of what mandatory service charges are and whether workers receive them.

Who does it affect?

Tipped workers such as restaurant servers, bartenders, hotel staff, and delivery workers are most directly affected, along with their employers. The change would have the greatest impact in the roughly 20 states that still rely on the lower federal tipped wage, as about 30 states already require employers to pay tipped workers the full state minimum wage.

Why does it matter?

Businesses that currently rely on the federal tip credit, particularly restaurants, would need to restructure their pay practices over the transition period. The elimination of the two-tier wage system would shift the base labor cost obligation fully to employers rather than relying on customer tips to close the gap.

Where does it stand?