Restaurant Social Media
Good Idea or Bad? Waiters required to reimburse restaurant owners for credit card fees on tips.
It seems that this practice is old hat to some and new news to others. While making tipped employees reimburse restaurant owners for these fees related to tops is legal (except in California and Colorado), it obviously creates resentment not only with staff but with consumers as well.
The only "shady" area is that there are different rates charged by the many banks and credit card companies. Usually the staff paying these fees are required to pay a flat rate for all credit cards transactions. That is not transparent and leaves lots of room for abuse by employers.
Additionally, if employers are DEMANDING these reimbursements as part of continuing employment, then the amounts collected should be reflected on payroll stubs each pay period. To date, I have yet to find any tipped employees who are provided a record/receipt of money demanded by their employers. These payments do not appear on year-end W-2's either. It has the appearance putting out "tip-jars" for employers.
Do employers report these reimbursements as revenue?
It is a sticky issue with abundant margin for abuse.
Your thoughts on the topic?
Paul C. Paz - www.WaitersWorld.com
The only "shady" area is that there are different rates charged by the many banks and credit card companies. Usually the staff paying these fees are required to pay a flat rate for all credit cards transactions. That is not transparent and leaves lots of room for abuse by employers.
Additionally, if employers are DEMANDING these reimbursements as part of continuing employment, then the amounts collected should be reflected on payroll stubs each pay period. To date, I have yet to find any tipped employees who are provided a record/receipt of money demanded by their employers. These payments do not appear on year-end W-2's either. It has the appearance putting out "tip-jars" for employers.
Do employers report these reimbursements as revenue?
It is a sticky issue with abundant margin for abuse.
Your thoughts on the topic?
Paul C. Paz - www.WaitersWorld.com
Replies to This Discussion
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Permalink Reply by Kory Lindersmith on -
I resell POS software. Our software has the ability to deduct a percentage of each employee's tips to "offset" the cost of cc fees. We've never had a customer that has wanted to do this, and in fact in, here in the midwest, they didn't even know people did such a thing.
I don't think its a very good way to boost your employee's moral, and the true cost of processing credit cards is pretty small (usually around 2%), so I don't think this is a good idea.
Our software will report the retained amounts in one of our sales reports, but I don't believe it shows it on a per empolyee report.
Kory Lindersmith
www.dakretail.com
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Permalink Reply by big4consulting on -
Hi Kory,
Where in the Midwest are you located? I am located in the Midwest (Chicago) and work for Mainstream Merchant Services. We are a merchant credit card processing firm focused on the restaurant and bar industry.
I'd like to chat with you in private sometime to see if there any possible synergies.
Best,
A.C.
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Permalink Reply by ruzzel dayrit on -
Cool. I wonder what are your thoughts regarding paypal vs merchant accounts issues?
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Permalink Reply by Steve Totillo on -
Bad idea. Period.
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Permalink Reply by Jay Larson on -
This is only a good idea if you are trying to build a culture of mis-trust and poor leadership on your way to setting records for high-turnover. Seriously, that is not the way to treat people!
Until managers and leadership are made aware that "treat your employee the way you would treat your guest" is the only profitable guideline, they will continue to come up with screwy ideas like this to try and show a profit.
What lies beneath, I believe, in this situation is that we have financial people running these operations and for the wrong reasons. You don't have to worry about your bottom-line if everyone in the company allready is because they love it there.
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Permalink Reply by firerose on -
I live in Colorado, so I had never even heard of this practice. That is horrible! What a fantastic way to create an environment with annoyed and unmotivated employees and a high turnover rate. I'm suprized it is legal. This is worse than making the servers pay if a guest skips out on a meal.
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Permalink Reply by Paul Paz on -
Hello Firerose...
Colorado and California have state laws that prohibit restaurants from this practice with tip. And I agree with your comment.
Paul www.WaitersWorld.com
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Permalink Reply by Dave Lenweaver on -
I've managed AAA Four Diamond/Mobil Four Star restaurants and treated my staff like adults and professionals. I could ask them to follow me to hell and back and they would because they know they are being treated as peers and pros.
This practice would make you look like a fool and you would loose any respect your staff may have.
Honestly, there other cost controls one can take advantage of with a much better rate of return. I actually can't believe anyone in their right mind would be so petty.
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Permalink Reply by Barry Chandler on -
I can't think of a single bigger reason to encourage staff to steal back the 2% in wine/liquor or cash from the cash drawer...
A very bad idea, methinks!
Barry
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Permalink Reply by Patrick O on -
Hi Paul.
Bad idea and if implemented would lose the respect of the best employees you have. I've never heard of this before and if I had to pay into it, it would be 'hasta la vista baby!'
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Permalink Reply by Paul Green on -
This is a BIG thumbs down !!
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