Voice of the Restaurant Industry
The truth about the federal tip credit.
The employee quickly realizes that the $5.00 an hour customer's are tipping him are not doing him any good at all. What good is $5.00 an hour in tips if it allows your employer to reduce your hourly wages by $5.00? He just can't believe that there is a law that allows his employer to reduce his wages if he receives tips so he goes on the internet and types in the words "tip credit", the words his employer used when explaining the federal law that supposedly allowed such deductions.
He finds the law on the internet and reads a fact sheet issued by the department of labor that explains,
If an employer elects to use the tip credit provision the employer must:
1) Inform each tipped employee about the tip credit allowance (including amount to be credited) before the credit is utilized.
2) Be able to show that the employee receives at least the minimum wage when direct wages and the tip credit allowance are combined.
3) Allow the tipped employee to retain all tips, whether or not the employer elects to take a tip credit for tips received, except to the extent the employee participates in a valid tip pooling arrangement.
Now here is the fact of the matter.
While the employer in this scenario clearly informed his employee of the tips credit, there is no way that it can be said that the employer is allowing the employee to retain all tips when the tip credit is taken.
The tips this employee is receiving are doing this employee no good at all. If customers where to stop tipping this employee, he would go home with the same earnings. Clearly the employee is not retaining his tips, for if he was retaining his tips, his earnings would be decreased when customers stopped tipping him. In this particular scenario, the only one who will lose any money if customer's stop tipping is the employer who would now have to take $5.00 out of his own pocket to pay the employee $7.25 an hour. Clearly the employee's tips are not being retained by the employee, but instead, are being retained and going into the pocket of his employer.
If the employee had been receiving $4.00 an hour before the tip credit was taken and customers stopped tipping, his employer would have had to have taken $4.00 an hour out of his own pocket to pay his employee's minimum wage. If the employer had been receiving $3.00 an hour before the tip credit was taken and customers stopped tipping, the employer would have had to have taken $3.00 an hour out of his own pocket to pay his employee minimum wage. If the employee had been receiving $2.22 an hour before the tip credit was taken, the employer would have had to have taken $2.22 an hour out of his own pocket to pay the employee's minimum wage.
The question I have for you is, how can it be said that an employer is allowing his employee to retain all tips when clearly the tips are going into the employer's pocket? You see, while a few con men would have us believe that the tip credit allows the employee to retain his tips, the truth of the matter is, the tip credit simply allows an employer to put the customer's tip in his own pocket. If customer's stop tipping this employee, you can clearly see where the money was going and who was retaining the tips. It was not the employee.
Now please inform others of what you now understand about the tip credit. The customer's tip is being stolen by business owners and our government is to blame for passing a law that blatantly allows businesses to steal the customer's private property, his tip. I am a tip earner who lives in a state where no tip credit is allowed. Thank God the people in my state were smart enough to see through this scam and refused to allow such criminal acts. The problem is, most states are allowing employers to steal the customers tip in such a manner.
The biggest problem is, we obviously have a federal government that thinks that it's ok for them to steal people's private property and give it over to special interests who are willing and eager to pay off our politicians with fund raising diners, large campaign contributions and comped meals in exchange for such favors.
Replies to This Discussion
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Permalink Reply by Giuseppe De Carlo on -
Hi My name is Giuseppe, I have been in this Industry all my life. From waiter, to propietor, I have argued this matter with waiters world for a long time.
(1) it started with compulsary tipping, telling diner how much to tip, for no reason, wich produces incompetance and laziness. No one has the right to tell diners what to tip.
(2) managment and propietors, realized the servers are making money, for basically no service, they decided to use the tips to theyr benefits. both of the above decission were unproductive and become dishonest, I have fought, for minimum wages with no compulsary tipping, this would improve service and servers would still make good tips, without making a definite tipping amount, leave that to the diners.
(3) when a diner leaves a tip, it is for the service given to the diner by the server, the better the service the better the tip.
(4) this is a token of appreciation between the customer and the server. it has nothing to do with the restaurant, or the food, only the service,
(5) wneh the tip is removed from the server, it is an act of theft, by someone who had nothing to do with the service, and should be treated as such. (the expectation of basic service should be explained, anything above that, is what a server usually gets tipped for.)
(6) the Governament has no right to interfear with a citizen earning, apart that they should pay tax on it, To Close, it is up to the diners discretion, whther to leave a tip or not, if they do it belongs to the server for the extra effort in service, if it is taken from them it is an act of theft, that money was left solely for the server. Forgive my spelling Giuseppe
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Permalink Reply by George on -
Thank you Giuseppe, I wish everyone had the insight to understand what you are saying. You are 100% correct in what you say. The problem is, most people in this country simply don't know what is going on in the service industry with tips. It's like the media has been paid off to ignore the issue. I have personally written over 500 editorials and not one has been accepted.
The media is intentionally controlling our people's perceptions of our government and our laws by refusing to publish any articles or present any information that exposes the truth of the matter, that being that our government is passing laws which enable business owners to steal the customer's private property, his tip. Every time minimum wage goes up, states are jumping at the chance to give over a bigger portion of the customer's tip to business owners.
Look at the current minimum wage increase. When the minimum wage was $4.25 an hour, employer could only steal a portion of the customer's tip, equal to half the minimum wage, $2.12 an hour. Now than minimum wage has been raised to $7.25 an hour, employers are allowed to steal a portion of the customers tip equal to $5.12 an hour. What it means to an employee is that if customers don't tip them more than $5.12 an hour, they are going to go home with no more in their pocket than they would if customers refused to tip. You see, the tip credit is constantly being expanded to a point where eventually only the employer will see any benefit from the tips customers are giving his worker.
Our government started off by allowing employers to steal $2.12 an hour of the tips customer give an employee. Now employers can steal $5.12 an hour of the tips customer's give an employee. If an employee doesn't receive over $5.12 an hour in tips, he might as well tell customers to stop tipping him. The problem is, if an employee actually did tell customers to stop tipping him, his employer would most likely fire the employee because customer tipping is currently putting $5.13 an hour in the employer's pocket, thanks to the federal tip credit.
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Permalink Reply by Giuseppe De Carlo on
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Hi George, dont give up, the ugly truth is the Governament is the problem, where is the union who is supposed to look after you. Giuseppe
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Permalink Reply by George on
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The government if aiding business owners in stealing the tips customers present their workers. This corruption must be exposed and ended.
Tip credits and employer required tip pools are both employer practices that indirectly steal the tips customers are presenting workers in the service industry.
I don't think that in a country that professes to protect our citizen's property rights, our government should be giving out free passes for businesses to steal other people's private property, and yet that is exactly what is going on.
Our government is intentionally misconstruing federal laws in a manner where a business can seize control of the tips customers are presenting their workers and the workers have absoluely no recourse. Business owners across this country our benefiting themselves to the tips customers are presenting their employees and our government condones such acts by fraudulently suggesting that such acts are not prohibited under federal law.
I will continue to fight against this injustice. I know that customers are not intending to enrich business owners when they tip employees in the service industry. That fact that business owners are confiscating and controlling our tips to their interests is to me a red flag that clearly brings to light just how corrupt our government has become.
Why is our government allowing business owners to confiscate the tips we citizens have given specific workers in the service industry? Why isn't our government insuring that business owners keep their greedy hands off our tips we are attempting to bestow on their underpaid and underappreciated workers.
Without a well compensated workforce that can afford to pay taxes for schools, roads, police, fire departments, military and social aid, our country is destined for failure. We need a well compensated workforce to continue funding our way of life. One way to keep some of them well compenstated is to protect their tips. Tip credits, along wth employer required tip pools must be prohibited on the grounds that both practices unlawfully steal the customer's tip for the benefit of business owners.
This is the truth and it will never go away.
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Permalink Reply by Giuseppe De Carlo on
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HI like George you are corect, the Governament, has no right, to make a decission between the general public and their donation, Religious bodies and charitable organization call it donations, deliveries, like flowers, telegrems in the past, special ordes, barbers, hair styilists, busckers, taxi driver, service industries, call it tips, this has nothing to do with governament, it is a sign of appreciacion, between two bodies of people, anyone interfiring with this procces is called stealing, Governament are great at creating unresolvible problems, then other bodies take advantige of the fact. where in the constitution does it state, that tips can be used as part of you wages, this just goes to show you the incopetance in the Governament, Governament and propitors have no say in what your tips are there for. Excusse the spelling.
Giuseppe,Hi have people seen Patti Davita, page?
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Permalink Reply by Giuseppe De Carlo on
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H
GeorgeI George, the newspaper doesnt care what hapens to waiters, what would happen if a dozen or so people woud write an article, re tips as stated, if a waiter whos minimum wage is $7.50 per hour and tips are $6.00 per hour you only get $1.50 in real wages and the tip is used to make the differance up to $7.50, you will state that the diner does not tip the waiter but the establishment. So compulsary tipping means the establishment is charging the general public between 15 to 25% more then the menu claims and use this money to pay general wages, the public should should refuse to pay for this because it is not a tip but a surcharge,
George what if a dozen people put a post like this on FaceBook, Tweeter, Utube, Blog, someone may take notice, (just a thought) Giuseppe
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