Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

- Tip Pool Method #3  Employer may require waitstaff to surrender all tips to a general tip pool where a manager counts tips and then disburses them among wait staff and other workers such as bussers, food runners or hosts/hostesses.  This arrangement can work well in a small family type setting.  If the employer is trustworthy and the servers trust one another this method can work well.  Tipped employees are encouraged to work more as a team.  This arrangement is not recommended for large restaurants.  In this situation, servers  lose their say in how much they want to tip out and can lose the incentive to sell high end bottles of wine if they must share the success of the sale/higher tip amount with the entire staff.   Often these types of tip pools are more prone to illegal deductions and coworkers may pocket some of their tips instead of surrendering them.  Also, its common for resentment to build among staff who consistently sell more than other servers.
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

- Tip Pool Method #2  requires wait staff to contribute a portion of tips BASED ON TOTAL FOOD SALES. Ex Server sold $1000 in food and beverage sales and or required to tip out 5 percent of those sales. This method  is not ideal. If a customer fails to tip, the waiter still is forced  to tip out the busser/food runner on sales, not actual tips received or a percentage which means the server assumes the risk solely, not the support staff. 
Ex.  A percentage of tips are deducted automatically from Credit Cardsale amounts not actually credit card tip amounts.  Although beneficial for the employer, it does not fairly meet the compensation of the servers. Also, it can cause headaches if the server fails to make minimum wage due to a bad tip.  Another example.  Once I worked at a casino which gave away $500 dinner vouchers to its loyal gamblers. Some of these diners came in with the vouchers, ran up the bill, but then did not tip out on $500. Sometimes these diners left only.$10. I was still required to tip out  a 15 % rate. ( Assuming I made $100, I owed the bussers $20 dollars even though I only made $10. I lost $10)  The result.  These type of diners were avoided like the plague and often received the worst service imaginable.  Angry and dissatisfied, they wrote searing, awful reviews on trip advisor.  My advice: Don’t put your servers in this position. If someone doesn’t tip properly, at least allow for adjustments and share the risk of business with everyone. The servers should not be the only ones who assume the burden of a bad tipper.
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

Tip Pooling


A tip pool is an arrangement where you agree to contribute a portion of your tips to  support staff  such as the bus person, host or bartender. The Pool House traditionally only includes tipped employees who are directly involved with service such as food runners, waiters, waitresses, host, bartenders, and buss persons. Listed below are some of the most common methods for pooling tips. Regardless of what type of pooled house the employer may use, tipped employees must be informed of the tip pool practice before they start working.

- Tip Pool Method #1   This method is to require wait staff to contribute a agreed upon percentage  amount portion of their tips based on actual tips received  and/or sales.
Ex.   Server agrees to a tip out amount of 15% to busser based on actual tips received If a server made $100 in tips, they must at least tip out 15 percent of tips to a bus person.  In this scenario, the server can elect to tip out more but they can not fall below the agreed upon amount to be disbursed among the staff.  The server also provides the employer with the amount of tips they received after tip out and the amount disbursed. The servers are provided with the daily sales information and know exactly how much food/wine they sold.  They retain tips and surrender only the tips required by the tip pool.  This is by far the fairest and best tip pool arrangement for both the  food server and employer.
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

2.  Credit Card Tips

- Employers are allowed to charge servers a fee to receive credit card tips by deducting a  processing fee. The industry standard is three percent, which means where the policy is practiced, a server may only collect $19.40 out of each $20 in tips.    States that prohibit employers from taking this deduction include: Alaska, California, Colorado, Montana, Nevada, Oregon, & Washington.

- Unlike cash tips which are received on the same day, employers are allowed to postpone disbursing credit card tips until the next scheduled pay period.

Statements issued by the U.S. Dept of  Labor from Opinion letters dated March 28th, 1977 and February 26, 1998- FLSA sS 3(m) and FOH3OdO5

“Where tips are charged on a credit card, it is the position of the Wage and Hour Division that the tips due the employee must be paid to the employee not later than the next regular pay day and may not be held by the employer while the employer is waiting to be reimbursed by the credit card company.”

“An employer may deduct an average standard composite amount for tip liquidation, rather than individually calculating the precise charge for each transaction, so long as the total amount collected reasonably reimburses the employer for no more than the total amounts charged by the credit card companies attributable to liquidating credit card tips.  Any employer attempt to deduct an average standard composite amount for tip liquidation that exceeds such expenditures is not acceptable.”

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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

Tips: the Basics
1.   Service charge vs. tip.

- When a service charge is added to a customers bill, full payment is expected and required from the customer.  Tips are strictly voluntary and nonenforceable.   Patrons can choose to leave a tip or not, for any amount they choose.

- Any currency/monies recovered or received from a service charge are property of the employer/restaurant and  and any monies a server receives from a service charge is recognized as a “commission” rather than a tip and is reported as income.

- Any tip provided by the customer and intended for the server is considered the property of the server and any monies a server receives from a customer is defined as a tip or a gratuity.

So basically, an automatic service charge belongs to your employer and they can choose how much they want to share with the server. They may even choose not to share anything. (if  this is the case, they must pay the full applicable minimum wage, not a subminimum wage)

A tip however, even if wait staff is required to participate in a tip pool is still considered the property of the server.  Some in the industry believe an automatic service charge would  help eliminate financial  risk  for servers. This however, would only be true if servers are guaranteed a certain percentage or commission, otherwise employers might not disburse any of the service charge to wait staff.
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

WAGE DEDUCTIONS:

The following ways a employer can legally deduct or reduce a server's cash wage or tips include:

- requiring servers to contribute to a tip pool
- deducting a percentage from a server’s credit card tips to cover the cost of credit card processing fee.
- Taking a tip credit.
- Taxes- such as FICA, payroll.

Any other deductions must be approved by a server first
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

Tip Credit History

1966 The Tip Credit is created.  In 1966, the Tip credit was 50%.   In 1980, the tip credit is reduced to its lowest  rate at 40 percent.  Today, in 2010, the tip credit  slightly exceeds 70%- the  highest in its  history.  If the tip credit returned  to 50 percent, then the federal subminimum wage for waitresses and waiters would be $3.63 today instead of $2.13 per hr.

When the U.S Dept of Labor states “If an employee’s tips combined with the employers direct wages do not equal the minimum hourly wage, the employer must make up the difference”, it only applies to the work week, not just the day you failed to make minimum wage.


(Federal min wage )$7.25 x 7 = $50.75. (daily)     or   $7.25 x 30 hrs = $217.50 (weekly)     In Santa Fe,  for example if you worked 30 hours, you must have earned at least $295.50 for the week combining tips and wage.  $2.13 +$7.73 (tip credit) = $9.85. If not, the employer must reimburse you.

Overtime on subminimum wages is determined by multiplying the employee’s regular rate of pay by 1.5 and then by subtracting the hourly tip credit.  The employee’s regular rate of pay can never be less than the full applicable minimum wage rate. Example $7.25 (Fed min wage rate or applicable min wage rate)  x  1.5   minus  $5.12 (Tip Credit)  = overtime hourly rate for servers who receive sub minimum wages.

Vacation pay is considered a “Benefit” and not covered or enforced by Federal/state wage and hour laws. You can file a discrimination case, however, if your employer elects to only provide vacation pay to employees of a certain ethnic background or gender who perform the same job.
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

The Tip Credit (70% today)


A TIP CREDIT is the total amount of tips an employer may count towards the total applicable minimum wage. The federal tip credit is $5.12. per hr.   A employer is allowed to pay servers $2.13 because they are claiming servers will make at least $5.12 an hour in tips.THIS IS WHY THEY ARE NOT REQUIRED TO PAY YOU THE FULL MINIMUM WAGE . $2.13 + tips received (Tip credit) must = the full  applicable minimum wage.


*Other states and cities have higher or lower tip credits. In Santa Fe, NM, for Example, where the full minimum wage is$9.85 employers take a higher tip credit.  They are still allowed to pay servers $2.13 per hr but those servers must make $7.72 per hr in tips. If  they don’t, the employer must reimburse them.     Some states such as Virginia and New Jersey, allow employers under certain circumstances to take a full 100% tip credit. This means servers in these states may receive no hourly cash wage at all. States that prohibit the tip credit include: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.Servers who work in these states receive the same minimum wage as all other workers.


AN EMPLOYER IS NOT ALLOWED TO TAKE THE TIP CREDIT UNDER THE FOLLOWING CONDITIONS:

 
TIP POOLING THAT INCLUDES THE BACK OF THE HOUSE EMPLOYEES

These workers are not directly involved in the chain of service.  They do not buss or run food to your tables. According to the FLSA,  Employers lose their right to the tip credit if they require wait staff to subsidize the wages of cooks, janitors, dishwashers, managers. If  your employer requires you to tip out the back of the house, they MUST PAY you the full applicable minimum wage per hr.



WHEN THERE ARE NO OPPORTUNTIES TO EARN TIPS.


Required attendance for staff meetings, training period or any time you must work but are not receiving tips. For example, if your employer requires you to come in on your day off for a staff meeting or to help set up Christmas decorations, they are required to pay you the full applicable minimum wage. Side work can only account for 20% of your shift. Excessive amount of time performing side work forfeits the employers right to the tip credit.
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Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

Server Wages: The Basics
1.   The most common and accepted way to pay servers in the U.S. is based on the tip system. Servers earn most of their income from tips received and diners are expected to pay an additional amount of 15- 20 percent for service  based on the amount of a meal by leaving a tip.  Although the diner is free to leave any amount or nothing at all, it is a common practice and culturally enforced.   Most employers are allowed to pay servers a direct special sub minimum wage that is lower than the federal minimum wage.

In other countries and in Europe it is more common for servers to receive an hourly living wage and often they do not expect or receive tips. The federal subminimum cash wage for  food servers in the U.S. is $2.13 per hour. States with lower sub minimum wages than the federal ($2.13) include  Oklahoma ($2.00), Virginia, and New Jersey ( These states are allowed to take a higher tip credit if they meet certain conditions resulting in a lower cash wage or none at all).

2.   On July 24, 2009  the Federal minimum wage increased to $7.25
The federal subminimum wage for tipped workers including servers DID NOT increase.It is still $2.13.  In fact, the sub minimum wage has not been raised in 17 years. Only the tip credit  increased; meaning employers will be able to count an increased amount of tips towards a servers wage.  $2.13 + tips = $7.25

3. Why hasn’t the Federal subminimum wage for waiter and waitresses been raised in 17 years?
In 1996, Republican lawmakers sided with restaurant industry  lobbyist and froze the subminimum wage at $2.13.  If the subminimum wage returned to 50 percent, then waiters and waitresses would earn $3.63 per hour today.
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