2021 Vermont Tipped Minimum Wage
The 2021 Vermont Tipped Minimum Wage is $5.88.
Effective 2021-01-01Source: Wage and Hour (Vermont Department of Labor)Verified 2026-08-30
Compared with 2020
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Minimum cash wage | $5.48 | $5.88 | +$0.40 (+7.3%) |
Who it applies to
Tipped employees in Vermont
What changed this year, and why
Vermont's minimum cash wage for tipped employees increased to $5.88 per hour, effective January 1, 2021, up from $5.48 in 2020.
Common questions
- What is the minimum cash wage for tipped employees in Vermont in 2021?
- Effective January 1, 2021, the minimum cash wage for tipped employees in Vermont is $5.88 per hour.
- How does the 2021 tipped wage compare to 2020?
- The tipped minimum cash wage increased from $5.48 per hour in 2020 to $5.88 per hour in 2021.
Who counts as a tipped employee
In Vermont, a worker counts as a tipped employee when they customarily and regularly receive tips above a small monthly threshold set by federal law. This definition matters because it determines whether an employer may apply the state's tip credit and pay the lower minimum cash wage of $5.88 instead of the full minimum wage. Workers in restaurants, bars, hotels, and other hospitality roles typically meet this threshold, but occasional tips — such as a retail clerk who sometimes receives a few dollars from customers — do not automatically qualify someone as tipped. If you are a tipped employee in Vermont, your employer may count your tips toward its minimum wage obligation, but only if the employer also pays you at least the direct cash wage and follows all required notice steps. If your tips fall short of bringing your total hourly earnings to Vermont's full minimum wage, your employer must make up the difference. Whether your tip volume is regular enough to place you in the tipped category is a factual question that depends on how often and how much you receive from customers in your particular role.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
What a tip credit is, and the cash wage underneath it
In Vermont, a tip credit is the amount an employer may subtract from the full state minimum wage when paying a tipped worker. The employer pays you a direct cash wage of $5.88 per hour in 2021, and the tip credit is the difference between that direct wage and the full $11.75 Vermont minimum wage. The credit is only allowed if your tips are enough to make up the gap so that your total hourly earnings reach at least $11.75. If your tips plus the $5.88 cash wage fall short of $11.75 in any workweek, your employer must add the difference to your paycheck so you are not paid below the state minimum. This structure lets employers count a portion of your tips toward their wage obligation, but it does not reduce the total amount you must receive — it only shifts part of the funding source from the employer’s pocket to your customers’ gratuities.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
When the tips do not get you to the minimum wage
In Vermont, if your tips plus the direct cash wage your employer pays you do not add up to the full state minimum wage in a workweek, your employer must make up the difference. In 2021, the Vermont minimum wage is $11.75 per hour and the minimum cash wage for tipped employees is $5.88. Your employer can only take a tip credit up to the point where your total hourly earnings equal $11.75. If your tips are low in a particular week — for example, during a slow season or on a bad shift — and your combined cash wage and tips fall below $11.75 per hour, the employer is required to pay the shortfall out of their own funds. This rule ensures that the tip credit never reduces your total compensation below the Vermont minimum wage, regardless of how much you actually receive in gratuities from customers.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
The notice an employer owes you before it takes the credit
In Vermont, before an employer can take a tip credit and pay you the lower cash wage of $5.88 per hour instead of the full $11.75 minimum wage, they must provide you with specific information about how the tip credit works. This notice requirement comes from federal law under the Fair Labor Standards Act, which Vermont employers must follow alongside state wage rules. The employer must inform you of the cash wage they will pay, the amount of the tip credit they will claim, that the tip credit cannot exceed the actual tips you receive, and that you retain all tips you earn (except for valid tip pooling arrangements). If your employer fails to give you this information before taking the tip credit, they lose the right to use it and must pay you the full Vermont minimum wage of $11.75 per hour for all hours worked. The notice must be provided in advance, not after the fact, so you understand your wage structure from the start.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
Your employer, your manager and your supervisor may not keep your tips
In Vermont, your employer, your manager, and your supervisor may not keep any portion of your tips. This rule comes from federal law under the Fair Labor Standards Act, which prohibits employers from retaining tips that belong to employees. All tips you receive belong to you, except to the extent you participate in a valid tip pool with other customarily tipped workers. Even if your employer pays you the full Vermont minimum wage of $11.75 per hour and does not take a tip credit, they still cannot take a share of your tips for themselves or for the business. Managers and supervisors are treated the same as the employer — they cannot keep any part of your gratuities, even if they occasionally help with tipped work. This rule ensures that tips remain the property of the workers who earn them from customers, not a revenue source for the employer or its management staff.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
Which tip pools you can be made to join
In Vermont, tip pools are limited to employees in occupations in which they customarily and regularly receive tips. This means you can only be required to contribute your tips to a pool that includes other workers who also typically receive gratuities from customers — such as servers, bartenders, bussers, and hosts. You cannot be forced to share your tips with cooks, dishwashers, janitors, or other back-of-house staff who do not customarily receive tips, unless those workers are also part of the tipped workforce under the law. This restriction applies whether or not your employer takes a tip credit. The purpose is to ensure that tip pooling remains a mechanism for sharing gratuities among workers who directly serve customers, not a way for employers to redistribute tips to employees who are already paid the full minimum wage without relying on customer generosity. If your employer requires you to pool tips with non-tipped workers, the arrangement violates federal law.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
Doing two jobs for one employer
In Vermont, if you work two different jobs for the same employer — one as a tipped worker and one as a non-tipped worker — you are a tipped employee only with respect to your employment as a server or other tipped occupation. This means your employer can pay you the lower tipped minimum cash wage of $5.88 per hour only for the hours you spend in the tipped role. For the hours you work in the non-tipped job, your employer must pay you the full Vermont minimum wage of $11.75 per hour. You cannot be classified as a tipped employee for all your hours just because you sometimes receive tips. The dual-jobs rule ensures that the tip credit applies only to the work that actually generates gratuities, and that you receive the full minimum wage for time spent on duties that do not involve customer tipping. Your employer must track your hours separately for each role and pay you accordingly.
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Wage and Hour (Vermont Department of Labor)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Wage and Hour (Vermont Department of Labor)
- Minimum cash wage
Effective 01/01/2021: $11.75 per hour worked / $5.88 for tipped employees
Other years
Every Vermont Tipped Minimum Wage year · Tipped Minimum Wage in every state