# What is the Allocated Tips Earnings Type used for?

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Resolution - The Payroll Allocated Tips Earnings Type is used to make up the difference between a Regular Earnings plus Reported Tips, if that total is less than the minimum wage.

NOTES:
1. The Allocated Tips Earnings Type is used to make up the difference between an Employee's Regular Earnings plus Reported Tips, if that total is less than the minimum wage.
The calculation is: ALLOCATED TIPS = REGULAR EARNINGS + REPORTED TIPS - MINIMUM WAGE

2. For example:
A. The Regular wage for an Employee is \$2.00/hour and the Employee works 40 hours which results in Regular Earnings of \$80.
B. This amount is added to the amount of Tips reported, for example, the reported tips are \$100.
C. The total wage amount based on minimum wage would be \$5/hr x 40 hours = \$200 assuming minimum wage is \$5 per hour.
D. The total of Regular Earnings (\$80) + Reported Tips (\$100) amount is then subtracted from the minimum wage amount: \$200 - \$180 = \$20
E. A timesheet would then be entered for \$20 using the Allocated Tips Earnings Type.