The U.S. Treasury Department recently released a preliminary list of tipped occupations, and if your business employs workers who receive tips, this update should be on your radar.
This draft list defines which job titles qualify as “tipped” under federal law. That matters because it directly affects how you:
Apply tip credits
Process tipped wages in payroll
Stay compliant with federal and state wage and tax requirements
Getting tipped wages wrong is one of the fastest ways to trigger a Department of Labor (DOL) audit, rack up penalties, or end up in costly lawsuits.
Think of it as the government’s compliance guide for which jobs typically receive tips.
Here’s what you need to know:
It’s not final yet. The current list is a draft. The official version will be published in the Federal Register after a public comment period.
You can provide feedback. Employers, trade groups, and the public will have a chance to weigh in before it’s finalized.
It sets the standard for compliance. Once final, this list will be a key reference point for employers and regulators when applying tipped wage rules.
Even if you’ve been paying tips the same way for years, the new list could change how you manage payroll.
Eligibility is critical. Only workers in recognized “tipped occupations” qualify for tip credit and special tax treatment.
Misclassification is costly. Paying the wrong way can trigger DOL audits, fines, and back wage liability.
State laws still apply. Many states already have stricter tipped wage laws, which means you’ll need to comply with both federal and state standards.
The most obvious industries include:
Hospitality & Food Service – Servers, bartenders, bussers, and similar roles.
Entertainment Venues – Theaters, clubs, and event centers where tipping is common.
Personal Services – Hairdressers, nail technicians, and related occupations.
Emerging Tipped Roles – Delivery services, home services, and even some construction-adjacent fields where tipping is on the rise.
If your workers regularly receive tips, this list could affect your payroll.
Don’t wait until the list is finalized. Prepare your business now with these steps:
Audit Your Workforce
Compare current job titles to the preliminary list and flag roles that may be impacted.
Review Actual Job Duties
Job titles aren’t enough — it’s the work performed that determines whether an employee qualifies.
Update Your Payroll System
Make sure your payroll software can handle tip credits, tip reporting, and accurate tax withholding.
Document Everything
Keep written records of how you classify tipped roles. Strong documentation is your best defense in a DOL audit.
Check State Tipped Wage Laws
Federal compliance isn’t enough. Many states impose stricter rules on tipped employees.
Some compliance issues aren’t straightforward:
Hybrid Roles – Employees who split time between tipped and non-tipped duties.
Changing Positions – Workers moving between tipped and non-tipped jobs.
State Conflicts – Some states won’t adopt the federal list or may set stricter standards.
Here’s how to stay ahead of the curve:
Begin reviewing your employee roles against the preliminary tipped occupations list.
Monitor updates from the Treasury and watch for the final version.
Prepare payroll systems now so you’re not scrambling when rules take effect.
Seek expert help. Mistakes with tipped wages are expensive — compliance is worth getting right the first time.
At Baron Payroll, we make payroll simple and compliant — even when rules get complicated. Whether it’s tipped wages, ITIN workers, prevailing wage, or multi-state payroll, we handle the compliance so you can focus on running your business.
Here’s how we help:
✅ Correctly apply tip credit rules
✅ Ensure payroll tax filings reflect actual tipped earnings
✅ Provide detailed reports and audit trails to reduce compliance risk
Don’t gamble with tipped wage compliance.
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Baron Payroll — Compliant. Simple. Done right the first time.
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