Restaurants & Hospitality: Hourly vs. Salaried Employee Payroll (2026)

Who in a restaurant can be salaried and exempt

A tipped employee is one who customarily and regularly receives more than $30 a month in tips. An employer taking a tip credit must pay a direct cash wage of at least $2.13 per hour and may claim a tip credit of up to $5.12 per hour against the $7.25 federal minimum wage, and overtime for tipped employees must be calculated on the full $7.25 minimum wage, not the cash wage.

An employer that takes a tip credit may require a tip pool only among employees who customarily and regularly receive tips, such as servers, bussers and service bartenders. An employer that pays a full cash wage of at least $7.25 may include cooks and dishwashers in a mandatory pool, but managers and supervisors may not receive tips from any pool.

The salary math for restaurants

The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for waiters and waitresses at $35,230, which is $678 a week, below the floor, so that role is non-exempt regardless of duties. Paying a salary to a non-exempt employee is legal; it just does not remove overtime, which is then computed on the salary divided by hours actually worked each week.

What changes when a role moves between the two

Moving servers and line cooks from hourly to salaried changes the pay code, the timekeeping rule and the overtime treatment at once. A salaried non-exempt employee still needs hours recorded every week, and a salaried exempt one needs the exemption documented against the rule above, because in an audit the burden of proving the exemption sits with the employer.