Florida minimum wage at $15: Re-baseline Restaurant Labor Cost and the Tip Credit Make-Up

The Florida minimum wage reached $15.00 per hour on September 30, 2026, and the tipped cash wage rose to $11.98. For restaurants, that is a one dollar step on every hour paid at or near the floor. Re-baseline labor cost by location, test the tip credit every workweek, and settle menu price decisions before October closes.

Why this matters now

Florida's wage floor has moved by one dollar every September 30 since 2021 under the constitutional amendment voters approved in 2020, and the 2026 step is the last fixed increase in that schedule. The U.S. Department of Labor's state table for tipped employees, last revised 2026-07-01, lists Florida's maximum tip credit at $3.02 and notes that the state minimum wage was scheduled to reach $15.00 on September 30, 2026. FloridaCommerce's 2026 minimum wage notice, updated for 2026-09-30, sets the rate at $15.00 per hour and the tipped direct wage at $11.98, and states that the rate runs through December 31, 2027.

Employment counsel flagged the operational list weeks ahead. Fisher Phillips wrote on 2026-09-21 that employers should update the minimum wage poster and refresh tip credit notices before September 30, and that a credit taken without a correct notice can be challenged. Lowndes noted on 2026-09-02 that the next change will be calculated on September 30, 2027 and take effect on January 1, 2028, indexed to CPI-W. In other words, 2027 is a flat year for the Florida floor, which is unusual and worth planning around.

Revenue is not rising to meet the step. The Intuit QuickBooks Small Business Index for October 2026, published 2026-10-01 with September data, reported that leisure and hospitality was the only sector where average real monthly revenue per small business fell, down 0.30 percent, even as the sector added 600 jobs. Hours are up, revenue per business is flat to down, and the hourly floor just rose. October is the first full period at $15.00, and the P&L for that period is where the step becomes visible.

Most published guidance on the Florida step covers compliance: the new poster, the refreshed tip credit notice, the $11.98 figure. Far less explains what the step does to prime cost by location, how to prove every tipped employee cleared $15.00 in every workweek, and where the make-up payment belongs in the books. That is what this article adds.

What the step does to labor cost by location

The headline change is one dollar per hour, but the cost to a restaurant is not one dollar times total hours. It is the sum of several bands, and each location has a different mix. Build the estimate from the payroll register, by location, using the hours actually paid in a recent full month.

The first band is non-tipped hourly staff who were at the old floor of $14.00: dishwashers, prep cooks, and hosts in many operations. Each of their hours costs exactly one dollar more. The second band is staff who sat between $14.00 and $15.00; they move up to the floor, so the increase is the gap, not a full dollar. The third band is compression. A line cook who earned $15.50 when the floor was $14.00 is now fifty cents above entry, and most operators give some raise to keep the spread. That is a choice, not a legal requirement, but it belongs in the estimate. The fourth band is tipped staff, whose cash wage moved from $10.98 to $11.98 because the $3.02 tip credit did not change.

Employer payroll taxes ride on every band. Social Security and Medicare add 7.65 percent of the increase. Unemployment taxes are usually capped by wage base and add little for established staff. Overtime adds a second layer for tipped employees. Under the federal rules summarized in the Department of Labor's Fact Sheet 15, the overtime rate for a tipped employee is based on the full minimum wage, not the cash wage. Each Florida overtime hour for a tipped employee now carries a regular rate of $15.00, an overtime rate of $22.50, and a cash portion of $19.48 after the $3.02 credit.

Here is a worked example for one full-service location doing $180,000 in monthly sales, using September hours before the step.

The step adds $5,921 a month, or 3.3 points of sales. If this location ran a prime cost of 62.0 percent in August, it runs 65.3 percent in October on the same sales and the same food cost, which crosses the line most operators treat as the ceiling. The break-even menu price increase to recover the dollars is the step cost divided by sales: $5,921 divided by $180,000, or 3.3 percent, before card fees on the higher ticket and before any traffic response. Run the same table for each location. A location with a mostly tipped front of house and a kitchen already above $15.00 will show a much smaller number than one staffed near the floor.

Two period details matter. September 30 falls inside a calendar month and inside most 4-week periods, so the period that contains it is a blend of old and new rates. Compare October, the first clean period, against August rather than September. And apply the new rate by hours worked, not by pay date. A pay period that began on September 27 pays $14.00 for hours through September 29 and $15.00 from September 30 onward, which means the payroll system or the timekeeping export has to split that week.

The tip credit make-up test, every workweek

Florida follows the federal structure for tipped employees. The employer may count up to $3.02 of tips per hour toward the $15.00 floor, so long as cash wages plus tips reach at least $15.00 per hour in each workweek. When they do not, the employer pays the difference as wages. Fact Sheet 15 puts it plainly: employers claiming a tip credit must be able to show in each workweek that tipped employees receive at least the full minimum wage when direct wages and the tip credit amount are combined.

The arithmetic is small, but it has to run for every tipped employee every week, and it has to run on the new numbers. A server who works 30 hours in a slow week earns $359.40 in cash wages at $11.98. If declared tips for the week are $80.00, total pay is $439.40 against a required $450.00, and the employer owes a $10.60 make-up. The threshold itself did not move with the step, because the credit stayed at $3.02 per hour: a tipped employee who averages at least $3.02 an hour in tips over the workweek clears the test at either floor. What the step changes is the cash wage on every hour, the overtime rate, and the notice behind the credit, which has to show the new figures. Expect make-ups on weekday lunch shifts, in the first weeks after an opening, and during the September to October lull in tourist markets.

Record the make-up as wages, in its own sub-account under front-of-house labor, and never as tips. Tips belong to the employee and move through tips payable, as described in the POS reconciliation guide. The make-up is the restaurant's own wage expense, subject to payroll taxes, and it belongs in the period of the workweek it covers. A separate account lets you see which location and which shifts generate make-ups, which is a scheduling signal, not just a compliance cost. Wages for the workweek are a flow for the period. Any portion unpaid at period end sits in accrued wages, a point-in-time liability that reverses when payroll runs.

Keep the tip credit notice on file for each tipped employee with a date on or before September 30. Counsel has been clear that a credit taken without the notice can be challenged, and the notice should state the new cash wage, the credit amount, and the employee's right to retain tips.

Accounting controls for the wage step

Source data: the payroll register for each location with hours by employee and rate, the timekeeping export that shows hours by work date so the September 30 split is visible, tip declarations from the POS by employee and week, period sales by location from the daily sales entries, the signed tip credit notices, and the FloridaCommerce notice itself. Keep the federal table and fact sheet with the file, and note that the federal table still showed $14.00 as of its July revision, so the state notice is the controlling reference.

Calculation: a versioned worksheet that multiplies hours in each wage band by the rate change, adds employer taxes at the stated rate, and divides by period sales to give the step as points of sales and the break-even price change. A second tab runs the tip credit test per employee per workweek: hours times $15.00, less cash wages, less declared tips, floored at zero. Formula cells only. The make-up total from that tab is the number that must agree with the make-up sub-account in the ledger.

Review: someone other than the payroll processor confirms that every hourly rate below $15.00 was changed effective for hours worked on or after September 30, samples a straddle week and traces the split, agrees the make-up sub-account to the worksheet, checks that overtime for tipped staff was computed on $15.00 rather than $11.98, and confirms that each tipped employee has a dated notice on file. The review also compares October labor percent by location against August and asks for an explanation of any move larger than the modeled step.

Decision: the owner or operator decides the menu price change and its timing, whether compression raises are given and how large, whether schedules change to reduce make-up exposure on slow shifts, and whether to keep the tip credit at all or move tipped staff to the full $15.00 cash wage. Record the decision, the date, and the review date. A price change that lives only in the POS is not a documented decision.

Limits and common mistakes

First, the straddle. Applying $15.00 from the pay date rather than the work date underpays hours worked between September 30 and the end of that pay period. The fix is a split pay period or a one-time adjustment, documented.

Second, stale references. Several widely used reference tables, including the federal state-by-state table, were last revised before the step and still show $14.00 and $10.98. Use the state notice as the authority and treat any table with an earlier revision date as background.

Third, booking the make-up through tips payable. That understates wage expense, overstates the liability, and hides the shifts that need attention.

Fourth, comparing locations across state lines on labor percent alone. A Florida location and a Georgia location now sit on floors that differ by more than seven dollars an hour, so labor percent and sales per labor hour need a floor-adjusted view before anyone is judged on them. The multi-location restaurant P&L guide covers how to set up that comparison.

Fifth, planning a 2027 step that does not exist. The schedule's next adjustment is calculated on September 30, 2027 and takes effect January 1, 2028, so the 2027 budget carries October's rate for fifteen months. That is a rare window to let menu prices and traffic settle before the next move.

Finally, this article covers the accounting and the arithmetic, not legal advice. Verify notice, poster, and overtime requirements with counsel, and confirm that your payroll provider applied the change as of the work date. Labor cost models and prime cost trackers that fit this layout are in the FinBoard templates library.

Frequently Asked Questions

What is the Florida minimum wage for tipped employees after September 30, 2026?

The tipped cash wage is $11.98 per hour, which is the $15.00 minimum wage less the unchanged $3.02 tip credit. Cash wages plus tips must reach at least $15.00 per hour in each workweek, and the employer pays any shortfall as wages.

How do I estimate what the $15.00 step costs my restaurant each month?

Group last month's paid hours by wage band, multiply each band's hours by its rate change, add employer payroll taxes on the increase, and divide the total by monthly sales. The result is the step in points of sales and also the break-even menu price increase before card fees and traffic effects.

When is the next Florida minimum wage increase after the $15.00 step?

The schedule's fixed increases ended at $15.00 on September 30, 2026. The next adjustment is calculated on September 30, 2027 from CPI-W inflation and takes effect on January 1, 2028, so 2027 has no Florida step.

How should a tip credit make-up payment be recorded in the books?

Record it as wage expense in its own sub-account under labor for the location, subject to payroll taxes, in the period of the workweek it covers. Do not run it through tips payable, because tips belong to the employee and the make-up is the restaurant's own wage cost.

FinBoard connects each location's QuickBooks file to one consolidated view with labor percent, prime cost, and drill-down to the payroll entries behind them, so the October re-baseline is a report rather than a spreadsheet project. See how FinBoard supports restaurant groups.