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Tips ARE wages.  One of the injustices of present Minnesota law is that the State of Minnesota long ago declared tips to be wages.

This was determined back when legislation was passed to require employers to withhold from an employee’s tips in the exact same

way they were required to withhold from employer paid wages.  To this point, employers must still pay FICA (social security tax) and

unemployment compensation taxes on their employee’s tips.  Tips are also considered wages by Social Security (FICA), Federal

Department of Labor, Federal Unemployment Taxes (FUTA), Internal Revenue Service, Minnesota Workers’ Compensation,

Minnesota Unemployment Compensation (SUTA) and the Minnesota Department of Revenue.  The only instance in which tips are not

considered wages by the State of Minnesota is when determining minimum wage compensation.


There was recent testimony at the Minnesota State Capital in opposition to a Tip Credit amendment stating that tips were between

the customers and the tipped employees and therefore were not were not wages.  This position has been patently refuted by the IRS

and the Minnesota Department of Labor as well as by all the rest of state and federal government agencies listed above.


Tips ARE wages, so why shouldn’t they count against minimum wage requirements?

This is a question for any legislator opposing a Tip Credit amendment to minimum wage legislation.