Tipped minimum wage in PR: $2.13 and $10.50

The three numbers that decide everything

If you work as a server, bartender, valet or in any position where you receive tips in Puerto Rico, your pay is built from two pieces and there are three numbers you need to know.

The official table of minimum wages for tipped employees from the **federal Department of Labor**, in its **July 1, 2026** version, gives these figures for Puerto Rico:

• **$10.50 per hour**, the combined cash-and-tips minimum wage. It is the floor: between what the employer pays and what you receive in tips, you must reach it.
• **$2.13 per hour**, the minimum **cash** wage the employer must pay out of its own pocket.
• **$8.37 per hour**, the maximum **tip credit**: what the employer may offset from its obligation by counting your tips. It is the difference between the two numbers above.
• And the threshold that defines you: under federal law you are a «tipped employee» if you receive **more than $30 a month** in tips.

What that means on your Friday shift

The mechanics are in **§ 203(m)(2)(A) of Title 29 of the United States Code**, the Fair Labor Standards Act (FLSA). It says that in determining the wage an employer must pay a tipped employee, the amount paid by the employer shall equal **(i)** the cash wage (which may not be less than the cash wage required for such an employee on **August 20, 1996**) **plus (ii)** an additional amount on account of tips received, **equal to the difference** between that cash wage and the wage in effect under § 206(a)(1).

In plain terms and with Puerto Rico's figures: the employer pays you $2.13 an hour and **counts your tips** to reach $10.50. If in one hour you made $12 in tips, it complied. If you made $3, **the employer must cover the difference** up to $10.50, because the statute sets a clear limit: **the additional amount on account of tips may not exceed the value of the tips actually received by the employee**.

That is the most common employer mistake and the one that leaves the most money uncollected: the tip credit **is not a fixed $8.37** deducted every time. It is a maximum. On a slow night, the real credit is what actually came in as tips, and the employer covers the rest.

What Puerto Rico law says, and why the floor is $10.50

The $10.50 does not come from federal law: it comes from **Act 47-2021, the «Puerto Rico Minimum Wage Act»**, which gave the island its own state minimum with staged increases, **$8.50 on January 1, 2022**, **$9.50 on July 1, 2023** and **$10.50 on July 1, 2024**, «unless the Minimum Wage Evaluating Commission issues a mandatory decree varying it».

And on tips, that same section says it in one sentence: **«Employees who receive tips shall be entitled to the federal minimum wage in effect for such workers, which added to tips must reach at least the minimum wage established in this Act or the mandatory decree that is approved.»**

There is the whole architecture: **the cash is set by the federal rule for tipped employees; the total you must reach is set by Puerto Rico law.** That is why on the island the combined number is $10.50 and not the federal $7.25.

The same statute clarifies the reverse direction: if the federal minimum were to become higher than the state one, **the federal prevails** in Puerto Rico for workers covered by the FLSA.

Who the state increase does not apply to

That same section of Act 47-2021 sets its own exclusions, and they are worth reading before claiming the $10.50:

• The increases apply to workers **covered by the FLSA**, **excepting** **agricultural industry workers**.
• They also do not apply to **employees of government agencies, instrumentalities, municipalities, the Judicial Branch and the Legislative Branch** of the Commonwealth.
• Nor to so-called **«Administrators», «Executives» and «Professionals»**, as those terms are defined by **Regulation Number 13 of the Minimum Wage Board**. Careful with this one: the category is decided by that regulation, **not by the title on your appointment**. A «floor supervisor» doing server work does not become an executive because of the job title.

The two conditions without which the employer may NOT use the credit

Here is the part almost nobody knows and that decides entire claims. The tip credit is not automatic: § 203(m)(2)(A) says, after explaining the formula, that **«the preceding 2 sentences shall not apply with respect to any tipped employee unless»** two things are met.

• **That the employee has been informed by the employer of the provisions of this subsection.** That is: they must explain that they will use the tip credit and how it works. Doing it silently in payroll is not enough.
• **That all tips received by the employee have been retained by the employee.** With one express exception: the subsection **does not prohibit pooling tips among employees who customarily and regularly receive tips**.
• If the employer fails either one, **it may not use the credit**, and then it owes the full minimum wage, not $2.13.

The employer cannot keep your tips. Ever.

**§ 203(m)(2)(B)** is a single sentence and the most forceful in this whole area. It is worth reading in full because it closes the door most often used:

**«An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees' tips, regardless of whether or not the employer takes a tip credit.»**

Note the three things that sentence closes at once. **For any purposes** (not to cover breakage, not to pay for the point-of-sale system, not for «card fees». **Including managers or supervisors**) a manager entering the pool is exactly what the law forbids. **Whether or not it takes the credit**, an employer paying you the full $10.50 also cannot keep any of your tips.

The pooling the law does allow is among **employees who customarily and regularly receive tips**. Splitting with the kitchen, with management or with the owner is not that.

Your vacation and sick leave are paid differently

This is the fact that almost never comes up in tip conversations and that is worth money every year. It is in **Article 4(d) of Act 180 of 1998**, which since Act 47-2021 is titled the «Puerto Rico Vacation and Sick Leave Act», because the minimum wage part moved to the new statute.

It says that in those cases where the employee **earns tips for their services**, or where the employer **shares with employees all or part of service charges**, payment of vacation and sick leave shall be made **on the basis of the legal minimum wage or the regular hourly wage agreed for such benefits, whichever is greater**.

That is: your vacation days and your sick days **are not paid at $2.13**. They are paid at the legal minimum (or at the agreed regular wage if higher) even though your day-to-day cash is the reduced one. If your vacation has been paid at the tip-credit cash wage, there is a difference to claim.

And there is a third turn of the same screw, in another statute: **Article 14(h) of Act 80** excludes from the «wage» used to compute severance **the portion of tips exceeding the amount used to meet the legal minimum wage**. In an unjust dismissal, your tips count only up to that point.

The special decree the law ordered, and what we cannot confirm for you

Act 47-2021 did not leave the tips question where it stands. It **ordered the Minimum Wage Evaluating Commission to establish a special mandatory decree** for workers subject to tip income, as the FLSA defines them.

And it told the Commission the standard: **«for workers subject to tip income, the Commission shall establish a base minimum wage so that in combination with tips received it is a wage equal to or greater than the minimum wage set in the mandatory decrees»**. It also provided that every special decree **shall prevail only while it is greater than the federal minimum wage**, that decrees go through the Chapter II procedure of Act 38-2017 (the Uniform Administrative Procedure Act), and that **a decree approved by the Commission shall have the force of law**.

Here we stop and say it plainly: **we could not verify whether that special tips decree has been issued, or with what figures**. If it exists, it governs over the base number above. Before claiming or accepting a job, ask the **Department of Labor and Human Resources** whether a special mandatory decree is in force for tipped employees.

That question, asked by phone or in writing, is one that changes an entire payroll conversation.

If the numbers do not add up: what to document and where to go

A tips claim is won with ordinary paperwork. Before talking to anyone, gather this by workweek:

• **Your hours worked** by week: punches, schedules, photos of the schedule posted in the kitchen.
• **The tips you declared** and the ones you received: tip reports, shift closeouts, card receipts.
• **The pay stub**, to see what hourly cash you are being paid and whether the tip credit appears.
• **How the pool is split** and **who is in it**: if managers or supervisors are inside, that alone is a violation of § 203(m)(2)(B).
• **Whether anyone explained the tip credit to you** and when. If it was never explained, that is the first of the two conditions the employer failed.
• **How your vacation and sick days were paid**, to compare against Article 4(d) of Act 180.