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sounds easy enough , right ? it is a hornets nest !!!
that creates all kinds of issues . including subjecting tips to fica , the money is also the restaurants property and they can distribute it anyway they want or not at all .
Ruling 2012-18 classifies automatic gratuities as service charges, which are considered restaurant income. If these service charges are distributed to employees, they are considered wages and not tips. This disrupts the long-standing restaurant industry practice of treating automatic gratuities as tips.
Why It Matters
Inability to take the “tip credit” in some situations. Perhaps the biggest hiccup with the IRS’s ruling is that restaurants can no longer take the “tip credit”—permitted by the Fair Labor Standards Act (FLSA) for employees who customarily and regularly receive tips—for employees who serve guests subject to an automatic gratuity. In other words, restaurants cannot count automatic gratuities toward the FLSA tip credit, even if they distribute the gratuities to employees. This poses an issue to restaurants because they must pay employees who serve these large parties and banquets at least the applicable minimum wage, as the employees are technically performing non-tipped work. This includes bussers and other front-of-the-house employees who are lawfully involved in tip pools.
Difficulty in determining wages for employees who have dual duties. Moreover, where employees have dual duties—e.g., they are simultaneously serving regularly sized parties (not subject to a service charge) and large parties or banquets (subject to a service charge)—restaurants face the daunting task of determining what wages to pay employees, as the employees are performing tipped and non-tipped work. The FLSA tip credit can be taken for only tipped work, but it is seemingly impossible to separate tipped work from non-tipped work when the tasks are performed concurrently.
Recalculation of overtime rates. A related issue is that restaurants need to recalculate employees’ overtime rates in situations where employees are paid a portion of automatic gratuities and they work more than 40 hours in a week or 8 hours in a day (depending on the state). Because the IRS’s ruling classifies automatic gratuities as wages and not tips, these payments count toward employees’ regular rates of pay, and consequently they must be factored into employees’ overtime rates.
Payroll and tax implications. The IRS’s ruling presents numerous tax implications. First, the Federal Insurance Contributions Act (FICA) tip credit permitted toward a portion of restaurants’ Social Security and Medicare taxes no longer applies with respect to service charges. Thus, the IRS’s ruling lowers the amount of the FICA tip credit available to restaurants.
Second, restaurants should report service charges distributed to their employees as wages—not as tips—on their payroll reports. Likewise, restaurants should omit service charges distributed to employees (assuming they exceed 10 percent of the sale) and respective sales when completing Form 8027 (Employer’s Annual Information Return of Tip Income and Allocated Tips).
Third, for income tax purposes, an event’s gross receipts will include the service charge as income, and the portion of the service charge distributed to employees should be reported as wages on the business tax return.
what a jobs worth is set by markets and usually the things we can't or won't do for ourselves pay the most money .
the things most of us can do pay the least .
the markets value some jobs so low that tipping is a way of appealing to the customer to be charitable so the job can actually pay more than the market values it .
Gotta side with the people who say if you can’t afford to tip properly, just don’t eat out. You don’t have to eat out after all. I’m a bit biased as my GF is a server part-time but she gets stiffed once or twice a day and I don’t think everyone realizes how it works - I sure didn’t!
For my GF, at her popular somewhat expensive chain restaurant, the chef gets a cut of the BILL not the tip. Let’s say a bill is $100, the chef gets $8. If you tip $10 my GF gets $2 and the chef gets $8. If you tip nothing my GF OWES the chef $8 that comes out of her other tips. So it’s entirely possible and has happened that a few bad tables cost her the tips for the entire shift! That’s more common at lunch because it’s slow, but still sucks when it happens. I think it’s the dumbest system I’ve ever heard, I don’t understand why the cut for the chef isn’t out of the tips themselves. Like 40% chef, 40% server, 20% hostess / bus boy or something like that. But nope, if you tip the chef in cash separately and zero tip the bill for instance she would owe the chef money AND he would keep the whole tip. Technically the chef is supposed to report the tip but of course they’re selfish and never do.
I probably revealed the restaurant by what I wrote if you can figure out what restaurant has a chef at the table lol
I have been a line cook in some 3 and 4 star restaurants, NEVER ever ever did the kitchen staff get a cut or a portion of tips.
Bus boys, yes, and they deserve the portion of tips as it saves the waitperson from the task of clearing the table, are right there as soon the table vacates so the server gets a new guest to get tips from sooner.
The host or hostess, though shouldnt get a cut. They shoukd also be paid reasonable livable wages. After all they cant sit someone until a table clears, but DO have to keep track of who is waiting and who is what sized party, and get them seated.
The faster a sercer can get tge orders in and in the hahds if the guest, the more likely they will turn more tables.
And one restaurant i worked at during the 7 months of high season people would actually wait 2 hours or more for a table. We'd (3 of us cooks, one prep cook) pump out 850 dinners in just the 4-5 hours of dinner time, cooked one at a time to order.
Trust me, we worked our tails off too. That was the restaurant where my gf made $1k a week in tips AFTER tipping out the bartender andthe busboys ( in the late 80s), while i made $500 (+160 ot) for cooking the meals that helped get them the tips.
BTW, i DO hope everyone knows you dont stiff the waitperson a tip if the FOOD itself was bad, under or over cooked, right?? THAT you send back to the kitchen. And right away, nit after you ate half of it. If its not what you thought, or you taste something that youre allergic to, for instance, you send it right back and reorder another dinner. The FOOD ( unless the waitperson ordered you the wrong thing totally) is not the waitpersons fault, its the kitchens fault, or simply that you didnt recognize from the description that it has an unagreeable component to you, and then its your fault. As the kitchen will do what they can to serve you something palatable to you on your order.
Restaurants are a tough business. As a lot of people think it ought to be " just the way my dear departed mother would make it ", or " just the way I'd make it"!
Some things have differing recipes. Some things, like liver and onions, IS just liver and onions, unless one of those components is over or under cooked!
Tipping badly because the food is not good is wrong. YOU have the chance to have your waitperson make it good for you, and theyd earn their tip by doing so.
one thing i want to add is that any restaurant that uses the words gratuities on the menu when they tell you your check includes a certain percentage added to the bill is now in violation of the law .
it must say service charge and keep in mind a service charge does not mean the staff gets a penny .
there are loads of law suits going on over this now as staff gets cheated as the service charges go right in to the company cash register . there is nothing that says it has to go to the staff .
I have been a line cook in some 3 and 4 star restaurants, NEVER ever ever did the kitchen staff get a cut or a portion of tips.
Bus boys, yes, and they deserve the portion of tips as it saves the waitperson from the task of clearing the table, are right there as soon the table vacates so the server gets a new guest to get tips from sooner.
The host or hostess, though shouldnt get a cut. They shoukd also be paid reasonable livable wages. After all they cant sit someone until a table clears, but DO have to keep track of who is waiting and who is what sized party, and get them seated.
The faster a sercer can get tge orders in and in the hahds if the guest, the more likely they will turn more tables.
And one restaurant i worked at during the 7 months of high season people would actually wait 2 hours or more for a table. We'd (3 of us cooks, one prep cook) pump out 850 dinners in just the 4-5 hours of dinner time, cooked one at a time to order.
Trust me, we worked our tails off too. That was the restaurant where my gf made $1k a week in tips AFTER tipping out the bartender andthe busboys ( in the late 80s), while i made $500 (+160 ot) for cooking the meals that helped get them the tips.
BTW, i DO hope everyone knows you dont stiff the waitperson a tip if the FOOD itself was bad, under or over cooked, right?? THAT you send back to the kitchen. And right away, nit after you ate half of it. If its not what you thought, or you taste something that youre allergic to, for instance, you send it right back and reorder another dinner. The FOOD ( unless the waitperson ordered you the wrong thing totally) is not the waitpersons fault, its the kitchens fault, or simply that you didnt recognize from the description that it has an unagreeable component to you, and then its your fault. As the kitchen will do what they can to serve you something palatable to you on your order.
Restaurants are a tough business. As a lot of people think it ought to be " just the way my dear departed mother would make it ", or " just the way I'd make it"!
Some things have differing recipes. Some things, like liver and onions, IS just liver and onions, unless one of those components is over or under cooked!
Tipping badly because the food is not good is wrong. YOU have the chance to have your waitperson make it good for you, and theyd earn their tip by doing so.
there are always times that things go wrong via the kitchen to our food . but my wife and i always look at how the restaurant and server make things right .
we have given 20%-30% tips to waiters where they screwed up my wifes dinner and it took so long to replace the food we just got it to go , because the waiter said " no charge -our error "
in business there will always be screw ups , but it is how you make the screw ups right that matters in the end .
Many of my friends and I all worked in food related jobs during high school and college. I personally did not consider it a good place to make a living, which inspired me to complete the university degree program. But seems like now that people are making it a life-long career and expecting more from it.
That's true. People are trying to make careers out of it but they shouldn't be. They want $15 an hour but these jobs were not designed for supporting families. They were designed for students and younger people to be stepping stones to something better.
The faster a sercer can get tge orders in and in the hahds if the guest, the more likely they will turn more tables.
this is one difference between more upscale restaurants and regular moderately priced ones. you are expected to take your time and not be rushed. so the slower turnover means less tables for the staff to get tipped on. so it makes sense for tips to be higher.
one thing i started doing a while back is ordering appetizers first and waiting a bit for ordering the entree. a lot of the moderate/lesser restaurants will deliver your entrees before finishing appetizers which is up there among the most annoying things that happens when eating in a restaurant.
Your financial condition should not dictate the percentage amount of a tip.
Pretty much. Ever since I first went to Japan in 2015 and experienced a culture where it's rude to tip, I've been having a hard time justifying going out to sit down restaurants. At 松屋 I can get curry for around 330-380 yen ($3-3.5) no tax (VAT already included) no tip (rude to tip, they will give you your money back). I go to some random Japanese place in America and pay around $7-10 for the same thing and I have to pay tax and tip on top of that. Min wage is 600-900 yen ($5.5-8.5) in Japan which is more than base waiter hourly ($2.13 though some places like NYC have it higher) in America plus the food is cheaper (plus COL is cheaper in Japan). What?!
I can't do it anymore. I've cooked a lot more since I came back. I also only go to places where I don't have to tip (take out, all inclusive, or some other similar variant). The way America passes on the cost to the consumer sometimes is disgusting. Restaurants should pay their employees a decent wage or just go out of business.
Pretty much. Ever since I first went to Japan in 2015 and experienced a culture where it's rude to tip, I've been having a hard time justifying going out to sit down restaurants. At 松屋 I can get curry for around 330-380 yen ($3-3.5) no tax (VAT already included) no tip (rude to tip, they will give you your money back).
Interesting. Do you know why it's considered rude to tip there?
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lol
