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Mandatory "Tip Sharing" is Unlawful: Feds (Read 9887 times)

Flapp_Jackson

Mandatory "Tip Sharing" is Unlawful: Feds
« on: October 01, 2023, 03:57:12 PM »
If you work as a server or bartender, and your employer requires tips be "pooled" and shared among everyone including non-tipped workers, your employer is breaking the law.

Ordinarily, wait staff gets paid below minimum wage with the expectation that tips will supplement their hourly wages to meet or hopefully exceed the minimum wage requirement.

According to the Federal government, those tips belong to the worker who received them from the customers -- especially if tips are needed to make minimum wage.  Pooling all tips and sharing the total among all workers seems to be common practice, so apparently managers don't know the law.

I don't know, but i would assume this doesn't apply to places like Starbucks which pays employees above minimum, and then pools tips to be fair to the whole team who might not be serving customers at the register.

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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

QUIETShooter

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #1 on: October 01, 2023, 05:56:16 PM »
I prefer to tip in cash to the server and try my best to make sure it is that server that gets the tip, not her co-workers.  Maybe they still share the tips but I prefer to make sure the one who gave me good service is the one who gets the cash tip.

Then what he/she does after that is up to them.

When I'm at the busy buffets in Vegas there are so many workers and people milling about that I often get paranoid if the tip on the table we leave is not "snatched" by a wrong worker or worse, an evil customer.  Again, maybe they pool their tips not sure.

But I will definitely track down a server who treated us with service that was extraordinary and was genuinely caring, friendly, and accommodating.  I hand their generous tip to them personally.

I personally think the tipping culture in the US is getting out of hand.  Some workers get downright nasty if we opt not to tip and they practically do nothing to deserve one.
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Sometimes you gotta know when to save your bullets.

RSN172

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #2 on: October 01, 2023, 07:48:51 PM »
I don’t think labor laws allow anyone to get paid below the minimum wage.  My daughter is a server, gets minimum wage but has a six figure income.

She works at a high end place and has had as much as $500 tip from a single table.
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Happily living in Puna

Flapp_Jackson

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #3 on: October 01, 2023, 08:12:57 PM »
Quote from: RSN172 on October 01, 2023, 07:48:51 PM
I don’t think labor laws allow anyone to get paid below the minimum wage.  My daughter is a server, gets minimum wage but has a six figure income.

She works at a high end place and has had as much as $500 tip from a single table.

It's been this way at least since the 80s when I was a Pizza Hut cook.

Waitresses (now the pc term is servers) were getting an hourly amount below federal minimum.  They needed to keep a ledger to record tips for each day/night they worked.

At the end of the pay period, if they didn't make enough to attain minimum wage, then the store had to pay them the minimum.  Needless to say, a watress who was routinely unable to meet the minimum wage after adding her tips wouldn't be working there long.

About 1985, the IRS started requiring businesses with tipped employees to estimate the % of their revenue that those employees should be making.  If the individual thought the estimate was too high (i.e. caused them to  pay too much in taxes), they'd again have to show evidence of actual tips such as a ledger they write in after each shift.

My ex was a waitress when we met in college.  She made really great money in Bethesda, MD, when she went home for Summer and other breaks.  Best tips were at Beefsteak Charlies'.  Plus she got wonderful food and beer for free.

But, even there, she was on the payroll making less than minimum before tips.
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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

Pancakes

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #4 on: October 02, 2023, 06:24:50 AM »
Quote from: RSN172 on October 01, 2023, 07:48:51 PM
I don’t think labor laws allow anyone to get paid below the minimum wage. 

Depends on the state.
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changemyoil66

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #5 on: October 02, 2023, 07:53:21 AM »
What normally happens is the waitstaff voluntarily split some tips with kitchen and other staff like bussers, etc...I say "voluntarily" as it's a customer or protocol to do so.  But there are places like the above that force it or I've even seen some places on TV where the owner keeps the tips.  I always wondered why anyone would work at a place where the owner keeps the tips and then decides what to give you. Suckers if you ask me.

Then there's the age old topic of how much to tip. It's just as bad as the 9mm vs. 45acp arguments. 

HHN did a story about the recent kitchen fee's added to bills. They said it was illegal to do without an obvious notice, like a sign in the front. When I get this kitchen fee, I just minus it from what I would have tipped without the fee and I write on the bill this as well, so they know.  Also I tip cash usually as taxation is theft.
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QUIETShooter

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #6 on: October 02, 2023, 08:51:46 AM »
Somewhere on the Dine-in menu at Zippy's they state about their "kitchen fee"  I think it's 3% added on to the bill.

States something about worker retention and offsets expenses, yada yada yada.......
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Sometimes you gotta know when to save your bullets.

RSN172

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #7 on: October 02, 2023, 11:58:33 AM »
Quote from: QUIETShooter on October 02, 2023, 08:51:46 AM
Somewhere on the Dine-in menu at Zippy's they state about their "kitchen fee"  I think it's 3% added on to the bill.

States something about worker retention and offsets expenses, yada yada yada.......
Just as bad as resort fees for stuff you don't use or don't want.
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Happily living in Puna

Flapp_Jackson

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #8 on: October 02, 2023, 01:22:50 PM »
Quote from: RSN172 on October 02, 2023, 11:58:33 AM
Just as bad as resort fees for stuff you don't use or don't want.

Worse .... it's like a car lot manager tacking on all those hidden up-charges and fees that make you pay way more than you thought when you agreed/ordered.

When a $25 meal tacks on tip, taxes and fees to become a $34 charge, it's no longer a $25 meal.  $9 is 36% more than the price you saw on the menu. 

That's how they get you.

But, hey!  At least the minimum wage workers can get $15/hour!
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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

Flapp_Jackson

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #9 on: October 03, 2023, 08:38:35 PM »
I just read a Civil Beat article i stumbled upon that gives more details on Hawaii's "tip credit" scheme.

Currently, the state minimum wage is $12/hr.  That will increase to $14/hr on 1/1/2024.

According to the law:
Quote
Section 387-2, HRS, also provides that an employer may pay tipped employees less
than the applicable minimum wage if the tipped employee customarily and regularly
receives more than $20 a month in tips and the combined amount of wages and
tips is more than the applicable minimum wage as shown in the table below...
Extracting the line from the table that applies to the 2023 $12/hr minimum:
Quote
Combined Wage + Tips Must Equal at Least $ per Hour:
              $12.00 + $7.00 tips = $19.00 per hour
Maximum Allowed Tip Credit Towards Minimum Wage:
              $1.00
Adjusted Minimum Wage Less Tip Credit:
              $11.00
Effective:
              October 1, 2022 to December 31, 2023

So, if a tipped employee makes at least the minimum in tips (avg $7/hr), then the employer can lower the salary of that employee by the maximum "tip credit", which is $1.  That means aside from tips, the employee is making $11/hr -- $1 less than minimum.

The tip average is obtained by adding the tips received in a week, then dividing that by the number of hours worked.  So, a bad tip-day can be offset by better days if in the same week.

The law as passed in 2022 says:

2024 Minimum wage will be $14/hr
The maximum tip credit would be $1.25
The resulting minimum wages after the tip credit would be $12.75/hr
   for employees making at least wages+tips = $21/hr.

Last Jan, the lawmakers put forward a bill to calculate future wage/tip credits as a straight 20% of the minimum wage.  That would have resulted in a credit of $2.80/hr for the employer -- more than double the scheduled $1.25 credit in the law.  That would have reduced the required wages paid to $11.20 versus $12.75.

I checked the status, and SB125 was last deferred in Feb 2023, so it looks DOA.
Quote
Senate Bill 125 would increase the “tip credit” amount to match 20%
of the Hawaii minimum wage, starting Jan. 1, 2024.
Quote
More than 100,000 people in Hawaii work in the leisure and hospitality
industries, where tips are common, according to the 2022 jobs report by
the Department of Business, Economic Development and Tourism.

Wakai said he understands that this bill could reduce the paychecks of
tens of thousands of people in Hawaii, as a way to redirect that money
intended for minimum-wage workers back into the hands of business
owners. But he said inflation and increases in labor costs could ultimately
push more restaurant owners into changes that would cut jobs, such as
automating their front-end interactions. So in that respect, he said, this
change could be a job saver. 
https://www.civilbeat.org/2023/01/tourists-guns-business-heres-what-hawaii-lawmakers-plan-to-tackle-in-2023/

https://labor.hawaii.gov/wsd/files/2022/06/Tip_Credit_Notice_with_exhibits_June2022.pdf

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=SB&billnumber=125&year=2023

************
Anyway, this is just to follow up in case anyone was still curious whether Hawaii allows employers to pay tipped employees less than the minimum.

The answer is "yes, but only if the employee makes enough over and above the actual minimum wage to allow the employer to take the tip credit."

 :shaka:
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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

Rocky

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #10 on: October 04, 2023, 07:37:27 AM »
Quote from: QUIETShooter on October 01, 2023, 05:56:16 PM
I prefer to tip in cash

    I copied this from someone else.

"I have really never thought of this has anyone else?
Please understand what NOT using cash is doing.
             
Why should we pay cash everywhere we can  with banknotes instead of a credit card?

     I have a $50 banknote in my pocket.
Going to a restaurant and paying for dinner with it.
The restaurant owner then uses the bill to pay for the laundry.
The laundry owner then uses the bill to pay the barber.
The barber will then use the bill for shopping.

    After an unlimited number of payments, it will still remain a $50, which has fulfilled its purpose to everyone who used it for payment and the bank has jumped dry from every cash payment transaction made...
 But if I come to a restaurant and pay digitally - Card, and bank fees for my payment transaction charged to the seller are 3%, so around $1.50  and so will the fee $1.50 for each further payment transaction or owner re laundry or payments of the owner of the laundry shop, or payments of the barber etc.....
Therefore, after 30 transactions, the initial $50 will remain only $5  and the remaining $45 became the property of the bank  thanks to all digital transactions and fees.

    Small businesses need your help and this is one way to help ourselves too.
Pull small draws of cash out at a time and use that instead of tap, credit, etc.
When this is put into perspective, imagine what each retailer is paying on a monthly basis in fees at 3% per transaction through their POS machine.
If they have, for example, $50,000 in sales & 90% are by Card, they are paying $1500 in fees in ONE Month. $18,000 in a year! That comes out of their income every month.
That would go a long way to helping that small business provide for its family! ''



to the server and try my best to make sure it is that server that gets the tip, not her co-workers.  Maybe they still share the tips but I prefer to make sure the one who gave me good service is the one who gets the cash tip.

Then what he/she does after that is up to them.

   " Back in the daze", I was on the sophomore work study program as a bus boy at IHOP.
Bus boys did dishes, cleared tables and supplied the cooks.
We (and cooks) were tipped by the waitresses.
One Sunday I was the only bus boy there (changed jackets several times due to sweat) and the waitresses made out great and so did I, including drinks at there place after work ! :love:

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changemyoil66

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #11 on: October 04, 2023, 08:13:24 AM »
I try my best to tip cash, as taxation is theft. It's up to them if they want to report the theft or not.
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Flapp_Jackson

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #12 on: October 04, 2023, 11:01:16 AM »
When you pay $50 for a meal, the cost of overhead, including credit card fees, is figured into the $50 you paid.

So, given a 3% fee, the meal actually only cost you $48.54 -- i assume including gratuity and tax (not stated in the long example).  Adding the 3% increases your cost to $50 total whether you pay by cash or card.

What most don't understand is that 3% fee exists as part of your bill whether or not you use cash.  So, if you use cash, the restaurant gets to keep that fee that would have otherwise gone to the bank.

The only time this isn't the case is if a business offers either a discount for using cash (like some gas stations do on the mainland) or tacks on an additional amount for credit card sales (like gun sellers routinely do).  The vast majority of consumers simply pay the fee no matter how they pay.

The $50 being spent several times doesn't diminish the value of the $50.  It just means a portion of that amount is covering the credit card fees that the businesses are passing along to the consumer.  Either the bank earns that 3%, or the business gets to keep it.  The fee comes out of your pocket on top of whatever the meal costs.

It's an accounting thing.  whether it's cash or credit, your $50 pays for what you received (food that is cooked, service, a place to sit, refills on your beverages, etc.), the lights, water and sewer services, taxes, labor (cooks, dishwashers, wait staff, managers), marketing, building repairs and maintenance, worker's comp and other insurance, and a litany of other expenses the business must pay in order to serve you that meal.  Credit card fees are simply another cost of doing business rolled up with all the rest whether or not your particular meal was paid for with cash.

 :popcorn:
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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

Flapp_Jackson

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #13 on: October 04, 2023, 11:09:53 AM »
Quote from: changemyoil66 on October 04, 2023, 08:13:24 AM
I try my best to tip cash, as taxation is theft. It's up to them if they want to report the theft or not.

The IRS uses estimates of what a server should have been tipped based on the amount of revenue the business brought in.

Unless the server keeps records of cash tips received proving they made less than the estimate, the server doesn't have the choice of paying the taxes or not.  They pay what the IRS says they owe using the amount the restaurant made as a starting point.

The IRS has different rules for tipped employees to make sure they aren't pocketing cash without reporting it, at least to a certain degree.  Why else would they put "Wages, tips and salary" for your earned income on your W-2?  Tips are being tracked.
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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

eyeeatingfish

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #14 on: October 04, 2023, 02:34:22 PM »
I got an idea, how about we do away with this stupid tip culture once and for all. Pay workers better and expect them to provide good service as part of their job. So many other countries don't have this tip culture and it is just so much easier for the customer.  Places expect tips for everything now, a big jar on the counter, a screen on the payment tablet where they don't even list 15% as a default, etc.

I think I saw one restaurant here where they had a sign saying no tips, that the price of the food includes quality pay for their workers.
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RSN172

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #15 on: October 04, 2023, 03:05:45 PM »
Quote from: eyeeatingfish on October 04, 2023, 02:34:22 PM
I got an idea, how about we do away with this stupid tip culture once and for all. Pay workers better and expect them to provide good service as part of their job. So many other countries don't have this tip culture and it is just so much easier for the customer.  Places expect tips for everything now, a big jar on the counter, a screen on the payment tablet where they don't even list 15% as a default, etc.

I think I saw one restaurant here where they had a sign saying no tips, that the price of the food includes quality pay for their workers.

In the case of where my daughter works, they would have to pay her about $52 an hour to equal what she is currently earning  with minimum wage plus tips.  Don't think her employer could afford to pay the wait staff like that or charge enough to cover.  Prices would be so high there would be no customers.
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Happily living in Puna

Flapp_Jackson

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #16 on: October 04, 2023, 04:13:11 PM »
Quote from: RSN172 on October 04, 2023, 03:05:45 PM
In the case of where my daughter works, they would have to pay her about $52 an hour to equal what she is currently earning  with minimum wage plus tips.  Don't think her employer could afford to pay the wait staff like that or charge enough to cover.  Prices would be so high there would be no customers.
Back in the 1984 timeframe, my ex told me she made almost $400+ on one table she served.  There was a group of about 6-8 Japanese businessmen (This is in Bethesda), and the check for the table was about $200.

That place had a smallish menu of great items, like chicken and ribs, steak and chicken, steak and ribs -- you get the picture.  Basically more food than most people can finish not to mention the sides, and it came with the all-you-can-eat salad bar of at least 30 items plus all-you-can-drink beer, wine and/or Sangria.

I have a feeling the all-you-can drink factored into her tip.  Two men fought over who would get the honor of paying the check.  Then they decided one would get the check, and one would get the tip. 

So, the first guy put down his $200 give or take, then the tipster put down $100 tip.

That made the first guy embarrassed that the check was nothing more than $200, so he added another $100 to the tip.  The two guys kept tossing out money on top of the tip until someone in the group said enough.

My ex wound up with the lion's share of over $400, and she shared with the others in the kitchen and on the floor who.

I wish that was the norm, but it's not.  Normally she made about $300-450 in tips per 6 hour shift at night.  Weekends were best, of course.

That's an average of $66/hour in just tips.  If I remember, she mainly worked the busiest nights and took 2-3 days off midweek.

It was hard work being on her feet all night and being nice to people who aren't always the nicest to servers.  But, it beat the heck out of most gigs.

While still in school, she worked a couple of Summers at Chesapeake Bay Seafood House.  Great food and it's all you can eat.  Whatever you order as your main entree you can then reorder anything else on the menu of equal or lesser price.  The steamed king crab legs were at the top.  Get that, and you own the menu -- or it owns you!

Remember, this was in the mid-80's.  prices and wages are much higher now, as is the tipping if the same percentages are used. (15-20%).
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The reasonable man adapts himself to the world;
the unreasonable one persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
-- George Bernard Shaw

eyeeatingfish

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #17 on: October 04, 2023, 08:38:46 PM »
Quote from: RSN172 on October 04, 2023, 03:05:45 PM
In the case of where my daughter works, they would have to pay her about $52 an hour to equal what she is currently earning with minimum wage plus tips.  Don't think her employer could afford to pay the wait staff like that or charge enough to cover.  Prices would be so high there would be no customers.

From the coverage I have seen of this issue, when restaurants implement these policies the cooks and other staff tend to love it since they don't usually get tips even if they work super hard.  The wait staff tend to hate it though because the hardest workers, especially at higher end places make serious money.

It is not a knock against waiters either, I just think it a system we don't need. Some industries get tips, others don't, it seems kind of arbitrary. Do you tip a dentist for a good teeth cleaning? Do you tip the post office man for a quickly delivered package? Do you tip the guy at Jiffy Lube for changing your car oil? I got rather used to restaurants in Japan, they are almost always polite by default and very often they have a large pitcher of ice water so I can refill my water myself, the only thing left is simply get my order correct and I am happy.

Seems like too many people here expect a tip, there isn't always the attitude of earning it. On top of that I feel guilty if I don't give a tip even if the service was bad (maybe that's just me?) so does the tip mean anything or is it just a social obligation?

I worked as a cook at Pizza hut for almost 2 years. I could be super friendly on the phone, make the pizza super quick and accurate but the driver is the one who benefitted. I did have one driver who would give the cooks about $3+/- a day out of his tips which was nice, especially for a high school kid, but it wasn't the norm for all the drivers.
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QUIETShooter

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #18 on: October 04, 2023, 09:43:36 PM »
Ever been to the Vegas Buffets and there are tip jars by the omelet station, the carving station, and the crepes and stir fry stations?

What's up with that?  Don't these guys make a decent wage?

Pretty soon there's gonna be tip jars every ten ft. for the buffet tray filler-uppers, the crab legs replenish craftsmen, and the peel and eat shrimp display specialists.

Oh, and let's not forget the salad and fruit arrangement artists.

Ah wait.....the dessert people......hey look, the cashier has a jar by her register...... :rofl:
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Sometimes you gotta know when to save your bullets.

RSN172

Re: Mandatory "Tip Sharing" is Unlawful: Feds
« Reply #19 on: October 04, 2023, 10:06:29 PM »
In the old days I would tip the rubbish man, as did most of the locals at Christmas time. Most would give beer. I would give cases of soda and juice since they already get a huge amount of beer.  My wife's cousin worked as a garbage man before they had the one arm bandit trucks.  Every Christmas he would end up with about a 100 cases of beer.  He kept about 20 cases to drink and sold the rest for $5 a case.  This was during the days when beer was about $8-10 a case of 24.
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Happily living in Puna
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