A tip is wage according to the Fair Labor Standard Act (FLSA). You are a tipped employee - that's for example a waitress or bellboy - if you receive regularly and customarily more than $30 a month in tip. If so, your employer is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage of $7,25 per hour.

Your employer can only do that if you are informed about the tip credit allowance, if your employer is able to show that you earn at least the minimum wage when direct wage and tip are combined and allows you to retain all tips. 

When you are subject to both the federal and state wage laws you are entitled to the provisions of each law which provide the greater benefits.

When you don't receive sufficient tips to make up the difference between the cash wage of at least $2.13 per hour and the minimum wage of at least $7.25, your employer must make up the difference.

If you get only tips and you don't get paid the cash wage of at least $2.13 you must earn the full minimum wage of at least $7.25.