Hacker News Reader

Comment by srinathrajaram | Hacker News Reader

>The worker's salary is a employer's responsibility. If the the worker become underpaid without the tipping, then the worker is underpaid by the employer.

This! Tipping is nothing but the employer passing the buck and guilting the customer.

View on HN

I find it very funny when people argue that increasing the minimum wage would increase costs for consumers (I don't necessarily disagree; in some cases it would, whether that is a bad thing is a different matter). I personally would pay a higher price, no tips and ensure that the workers serving can meet their basic needs via wages alone.

Just an FYI, but if a tipped employee does not meet the minimum wage, the employer must make up the difference.

https://webapps.dol.gov/elaws/faq/esa/flsa/002.htm

This is almost certainly going to rarely happen. Almost no server feels empowered enough to insist on this. And restaurant owners will start insisting on collecting and counting cash tips so they can fully account for the wages. No server wants their boss counting their cash tips. At least in Massachusetts, declared tips is self reported.

I'm surprised this is still allowed by the IRS. When I was a waiter back in the 80's in California, we went from self-reporting to turning in our tips. All the tips were pooled, then divvy'd up between waitstaff, busboys, cooks, managers etc. And taxes were taken documented. So our "paycheck" was puny since the withholding was taken from our hourly payrate.

I've even seen something very shady recently - a nice restaurant that added a mandatory 20% "service fee" to our party of 7, had fine print that said "60% of your service fee goes to your wait staff."

The implication is that not only is this restaurant, which we ended up paying ~$80 a person to eat dinner + wine + dessert at, screwing their customers with the mandatory service charge, they're also screwing their employees by keeping 40% of it for the owner. I won't eat there again...

Edit: Added visual proof (and name and shame): https://s3-media4.fl.yelpcdn.com/bphoto/t3UUaCU8gl6zPsVQghlv...

I would be happy to learn that the 40% was going to the cooks. It's still a shady practice, and what makes it worse than not informing your guests ahead of time is that they're doing this in the name of "providing a livable wage for our staff." Pay your staff a livable salary and stop screwing your customers over...

> keeping 40% of it for the owner

Depending on the city and state, this could be illegal. I'd encourage you to ask the server if the 40% goes to the kitchen or the owner. If the latter, write a letter or make a call to your labour law enforcement group.

It's not illegal.

https://www.dol.gov/whd/regs/compliance/whdfs15.pdf

>A compulsory charge for service, for example, 15 percent of the bill, is not a tip. Such charges are part of the employer's gross receipts. Sums distributed to employees from service charges cannot be counted as tips received, but may be used to satisfy the employer's minimum wage and overtime obligations under the FLSA. If an employee receives tips in addition to the compulsory service charge, those tips may be considered in determining whether the employee is a tipped employee and in the application of the tip credit.

Hence my caveat, "depending on the city and state". For example, it's not allowed in California [1].

[1] http://www.tipcompliance.com/polLearningCenter.cfm?doc_id=89

> The implication is that... they're also screwing their employees by keeping 40% of it for the owner...

Probably not. In the restaurant I worked at was customary for the waiters to tip the kitchen and support staff. Owners were not tipped.

I doubt that the 40% goes to the owner, it probably goes to the kitchen staff.

Hopefully the hostess and back of the house was tipped out with that 40%. It's also likely that 40% went into the owner's pocket though because that's totally legal! Since it was a non-negotiable service fee the DOL doesn't consider it gratuity (as gratuity is strictly optional) so they don't have to pass it on to their staff. I've seen this happen plenty of times, usually in the catering business, though not to the extent of 40%, usually around 5-10%.

Others have been willing to backtrack:

http://www.seattletimes.com/life/food-drink/seattle-restaura...

I used to do accounting for a restaurant and I would disagree with you and say with the move to modern Point Of Sale software restaurants not doing this would be the exception now. We checked this every pay period to make sure servers were at or over the proper hourly wage because it is illegal to pay them less.

Florida based for reference, tips are self reported here too but our POS system would automatically transfer tip amounts when a credit card was the payment method. So our payroll system already has that amount. Then we had an electronic time clock where servers scanned their hand to clock in\out, and it was set to prompt them for declared cash tips. It was a nicer restaurant (avg check a bit over 100$). Occasionally a server wouldn't declare enough tips to hit minimum wage for a pay period and the first thing HR would do is check to make sure they were declaring cash tips. In 5 years working there I can't remember a single time a server was actually under minimum wage for a pay period, they just weren't declaring cash tips because CC tips usually covered it.

I have been out of hospitality for a few years but I am seeing even smaller places with POS systems run on Ipads. I would assume since we live in the future these have similar features to the ancient 'micros' brand POS system we used and could integrate with quickbooks or better accounting software to run payroll and do these calculations.

P.S. for any server (or employee anywhere for that matter) who thinks their company is doing something illegal you don't have to even talk to your manager/boss/owner, just call the Department of Labor they pay people to fix these problems for you.

That's at a nice restaurant though. It's more common than you think that there are restaurants just using paper tickets. I think Waffle House still does paper checks only and that's a huge chain. And most mom and pop restaurants too.

I've waitressed before and when I was a little short of minimum wage several times due to us being a slow/cheap restaurant the management just said "Some weeks you make more some you make less" and didn't try to correct it. I couldn't risk loosing my job. Sure, if they fired me for reporting them they'd be in trouble, but how long would it take for me to get justice and force them to pay? I wouldn't be able to eat while I waited for some kind of justice to be doled out.

That is an unfortunate position, and I doubt you are the only one to have experienced that. I was personally employed at a place that didn't pay overtime, that is why I was aware of the DOL as a tool. One of the other employees called to try to get an investigation going and shared it with us. The owners never knew.

That rarely gets enforced. Employers don't want to pay, employees want to enhance their wages by not paying taxes.

And in many cases, not reporting your tips as income and paying income tax on them is illegal...of course, not much chance of getting caught.

IIRC, reporting lower-than-expected tips increases the probability of a tax audit, and required tip reporting for payroll and other tax purposes makes it not-that-hard for employee underreporting to be detected and established in the event of such an audit.

This idea of "making up the difference" comes up in every convo on tipping. The counter point is usually that it doesn't happen. (Debate ensues...)

But even if it happened FOR SURE EVERY TIME. What an inefficient system! Rather than just paying the minimum wage up front, with predictable, projectable costs, businesses spend person hours on calculating tips, hours worked, per employee, etc. And then have to pay (potentially) widely varying amounts at the end of the cycle.

I get that some customers and some servers like the practice of tipping. But why not require employers to pay (at least) the minimum wage, period. You could still tip if you want to, and an you can still try to earn a tip if you want to. But now it's more like a bonus, gravy, than the difference between rent and no-rent.

  you can still try to earn a tip if you want to.
  But now it's more like a bonus, gravy

Isn't that where we started? I don't think that's stable. If some people get tips, the next tier of goodish servers is going to think they deserve tips, until you end up where we are now.

You can start there and stay there. This does not escalate like you assume. The rest of the world works just fine with this system.

I suspect that the escalation in the US has something to do with employers getting greedy and trying to reduce wages to factor in tips. I don't have any evidence to back this up.

> Just an FYI, but if a tipped employee does not meet the minimum wage, the employer must make up the difference.

In most cases, they'll also be fired quickly if they don't, so they'll overreport tips to "make" the minimum wage even if they don't actually receive enough.

Whether or not tipping should exist, if it does, it shouldn't substitute for the minimum wage, it should be entirely on top of it.

It's more insidious than that, since cash tips are self-reported income, it's also a great way to shield income from the IRS and reduce taxable income

It's an ingrained part of US culture. An individual restaurant owner _could_ try to change it, but that would probably be very hard.

Reply on news.ycombinator.com