Image back
Blog

9 Facts Everyone Needs to Know About Tipping

There’s no TIP-toeing around the issue … the world has a lot of opinion about tipping in the service industry. If you’ve been on the Internet anytime soon and you’re a server, chances are you’ve seen the flurry of chatter on the subject – namely, whether the service industry should get tips or not. News […]

There’s no TIP-toeing around the issue … the world has a lot of opinion about tipping in the service industry.

If you’ve been on the Internet anytime soon and you’re a server, chances are you’ve seen the flurry of chatter on the subject – namely, whether the service industry should get tips or not.

News outlets like Huffington Post to The Washington Post, to The Daily Meal have covered the pros and cons of a society that tips.

And then you’ve got lifestyle hubs like Thrillest throwing out some pretty strong arguments to do away with tipping altogether.

If you ask us, that’s a whole lot of opinion swirling around the subject .

So, we decided to go on a hunt for the facts. You know, the brass tacks about tipping. Use them when you’re out talking with your friends or need a little ammo for your social networks. Or just relish in the fact that well … you’ve got the facts.

Tip Credit: Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13) and the federal minimum wage. Thus, the maximum tip credit that an employer can currently claim under the FLSA is $5.12 per hour (the minimum wage of $7.25 minus the minimum required cash wage of $2.13).

Tip Pool: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), bussers, and service bartenders. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors.

Additionally, people in the food preparation and serving related occupations make up 47 percent amount to 1.54 million of the minimum wage (and below) workforce.

Twenty-eight states have voluntarily raised servers’ minimum wage above $2.13 an hour.

Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale*, the employer may pay the employee the tip, less that percentage.

For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA. However, this charge on the tip may not reduce the employee’s wage below the required minimum wage. The amount due the employee must be paid no later than the regular pay day and may not be held while the employer is awaiting reimbursement from the credit card company.

Sources: n https://www.simple.com/blog/simple-insights-lets-talk-tipping n http://www.bls.gov/ n http://www.dol.gov/dol/topic/wages/wagestips.htm n http://www.npr.org/blogs/thetwo-way/2014/07/19/332879409/states-that-raised-minimum-wage-see-faster-job-growth-report-says

Don't just dream of being awesome. Get a Demo