Arkansas: Minimum Wage Laws and Rules for Tipped Employees

State Minimum Wage 

Arkansas is currently the only state in the Mid-South region with the highest wage for minimum wage workers. The state minimum wage for Arkansas was increased to $8.50 on January 1st, which is a dollar higher than the previous wage of $7.25 (the current federal minimum wage).  Every employee has the right to earn the complete state minimum wage per hour unless the employer is covered under the Fair Labor Standards Act (FLSA).  If the employer is in compliance with FLSA, the employer is allowed to pay employees at the federal minimum wage rate. Although the State Minimum Wage rate has been changed for Arkansas, the laws and rules for tipped employees remain the same with a change in pay.  

Minimum Wage for Tip Employees  

The state of Arkansas interprets tips as an amount of money a customer gives to an employee as a gift in return of a service that was performed. Some employees may earn more money in tips than the regular wages paid by their employers, which is why the minimum wage for tipped employees is drastically decreased. The current minimum wage for tipped employees in Arkansas is $2.63 per hour. This may seem unfair to many people, but there are state and federal minimum wage laws that help benefit the serving industry. For example, if a bartender does not meet the standard minimum wage threshold after the regular tipped wage and additional tips earned that day, the employer is required to make up the difference. This is known as “Tip Credit”. 

Tip Sharing and Pooling  

Tip sharing and pooling are two arrangements that are permitted by Arkansas law. The employer must have the consent of the employees before deciding to practice any of these two methods. Tip sharing or splitting is the method of giving a portion of the tips an employee made to another employee. For example, a waiter may split the tips he or she made with the person in charge of cleaning the tables. Tip pooling is relatively the same method as tip sharing with an additional step implemented for equal portion distribution among all employees. A pre-established  formula must be used to help calculate a fair and equal potion from all the tips combined that will be distributed to each employee. Both of these practices are optional and are not regulated or mandated by any laws.