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Waiter, waitress or server, tip credit can be a hard reality, especially in today's economy.

Posted Tuesday, July 7, 2009, at 7:53 PM

Many years ago I was in the restaurant business and learned to deal with a thing called "tip credit". This is a Federal program that allows employers to use tips earned by a server and apply it to their minimum wage. As I understand it, the minimum wage will become $7.25 per hour this July 24th.

To some this may sound like a lot, but based on a 40 hour week and working all 52 weeks a year this comes out to just over $15,000 a year. When I think of it that way, I do not see how most people make ends meet, but consider tip credit and more importantly the abuse of the tip credit program by employers and it becomes a crime.

I was constantly battling high payroll percentages with corporate (although I doubt any of my employees thought it was high). I originally bought the company line that if the servers were not making good tips, it was their fault, but it did not take long to "open my eyes". Tips rely on many things that are not always in the control of the server.

Was the food cooked well, was the restaurant too warm, to cold, too noisy, was the food late in coming, and accurate? The server can influence some of these factors but management needs to look hard at all factors before they decide who is to blame.

Then we have the customers. Do they realize that the server is often working for tips just to make minimum wage? Do they tip a minimum, just 'because' or do they tip for the quality of service they get from that individual?

Before I worked in food service I was guilty of being very erratic and downright cheap with my tips. Now, I can get mediocre food yet tip the server 18-20% if they did their best and were friendly.

If the server is running all over the place, because management only scheduled a skeleton shift, why should I penalize the server? If I see a bus outside, I know what to expect and can go somewhere else, but if I stay and things are a bit slow, can I take it out on the server by holding back tips?

I don't tip the same for buffets and if I get downright poor service, it is reflected in my tips, so I am not saying they can do no wrong, but is there anyone else out there that thinks if we want to eat out and ask someone to wait on us, we should be willing to say thanks with our pocketbook?


Comments
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If you can't afford to tip you can't afford to eat out. I pay for my table if I sit and talk for a long time. I think that is fair.

-- Posted by AUfan on Tue, Jul 7, 2009, at 8:15 PM

I know that I will get alot of flack for what I am about to say but here goes anyway. I think a waiter/waitress should be paid minimum wage just like everyone else with periodic raises...just like everyone else. I dont think it is fair to the customer to pay big tips just because the business or government pays below minimum wage and the waitor/waitress has to make the rest up from the customer. And yes...I think what I pay for my tips is fair. My family is below average in income and we have limited luxuries that we treat ourselves to...one of them is eatting out. If the food wasnt so rediculously high in some of these places then maybe the servers would make a decent living.

-- Posted by AmericanWoman on Tue, Jul 7, 2009, at 11:09 PM

I also believe that the servers should be paid at least minimum wage and the tip should not be included in the wage amount. I tip my servers well and part of that is I know they do not make minimum wage, but then that does not make a tip a tip either. If the servers made minimum wage then the tip might actually mean something and encourage some competitiveness between resturants.

-- Posted by Sharon22 on Wed, Jul 8, 2009, at 7:31 AM

I don't know that there is much to give you flak about AmericanWoman. A tip should be just that, something over and above the normal rate of pay. I never got good grades when it came to payroll because I would shift my servers back and forth between "cooks" pay and service when they were doing prep work or 'dead hours. of operation. I don't know if my people knew that, but....

What got me fired up is that I am aware of some management currently abusing the tip credit program. This is where they do not make up the difference between tips and minimum wage or they make them share with helpers who are not on tip credit.

Good relations in a restaurant may warrant the server 'tipping' their support persons, but not forcing it, nor to the point the server is below minimum.

The server could report it, but then they lose their job. Meager as it is, it is still something and right now is not a good time to be looking for work. I guess it is never good, but there are better times than others.

My other reason for opening the discussion is to make as many aware that the service persons are often not "raking it in" but just getting by like many of us.

-- Posted by stevemills on Wed, Jul 8, 2009, at 7:40 AM

Is it a good thing before tipping to ask your server if their tips are being shared? That way it gives me the customer an idea of what restaurants practice those tactics.

-- Posted by wonderer on Wed, Jul 8, 2009, at 11:45 AM

Is it a good thing before tipping to ask your server if their tips are being shared? That way it gives me the customer an idea of what restaurants practice those tactics.

-- Posted by wonderer on Wed, Jul 8, 2009, at 11:48 AM

I have worked several jobs as a waitress. I hated it except for the bar job.

In the bars you'll get a good tip.

One day at a restaurant i worked at on monteagle mountain, some rich folks came in to eat.

One of the "ladies" was very obnoxious and rude but I bit my tongue and smiled and helped anyhow..

I had just beome a Christian, so i wanted to "go above and beyond".... well when it was time to leave.. that ...female dog.. gave me 10 pennies..

everyone else in the group of 12 gave good tips.

I waited till she had her mink coat on, and was preparing to check out. Then in my best Jeeves Voice, I asked if "the madam had forgotten something" at the table.. I handed her, her pennies back. And walked off. Her friends looked embarressed for her. But i felt much better, and i did'nt even B slap her!

Hurrah temperance!!!

-- Posted by 4fabfelines on Wed, Jul 8, 2009, at 2:53 PM

Bear in mind that if a server is stiffed,undertipped,wages are reduced or portions of the tips are given to support staff,the server might still be held accountable for the normal degree of tipping by the tax folk.

A server who is tipped a nice,shiny quarter for 45 minutes spent tending to a table of four eating the six dollar daily special is going to be taxed as if the tip were $4.80.

I recall reading this story years ago.

Times have changed but the character values expressed in this account are still valid.

"This is from an old story, back in the '30s, in the days when an ice cream sundae cost much less.

A 10 year-old boy entered a hotel coffee shop and sat at a table.

A waitress put a glass of water in front of him.

'How much is an ice cream sundae?' the little boy asked.

'Fifty cents' replied the waitress.

The little boy pulled his hand out of his pocket and studied the coins he had.

'Well, how much is a plain dish of ice cream?' he inquired.

By now, more people were waiting for a table and the waitress was growing very impatient.

'Thirty-five cents' she brusquely replied.

The little boy again counted his coins.

'I'll have the plain ice cream' he said.

The waitress brought the ice cream,put the bill on the table and walked away.

The boy finished the ice cream, paid the cashier and left.

When the waitress came back,she began to cry.

As she wiped down the table,there,placed neatly beside the empty dish,were two nickels and five pennies.

You see, he couldn't have the sundae because he had to have enough money to leave her a tip."

If service is bad or the food inedible,make your statement in some other way than shortchanging the tip.

(If one has to leave less than one would like,make sure the server knows that the lesser amount wasn't a slur against him or her.

If we didn't have to pay up front in so many eating establishments,it might make more sense to refuse to pay the bill but leave a decent tip when the server was professional and everything else substandard.)

A little mutual respect would result in the restaurant giving its best to its customers and staff,the workers performing well for employers and patrons and the customers rewarding those who serve them with appreciation,apprpriate compensation for the work they do,constructive criticism when warranted and recognition of their worth.

Money is needed to live on but treating people as though they have value costs nothing but is a gift beyond price.

-- Posted by quantumcat on Wed, Jul 8, 2009, at 6:41 PM

I would like to know the conversations surrounding that 10 penny tip. Her friends had to have noticed. If If she was legitimately cash strapped her friends should have pooled the tip to make it less obvious. If not they thought it was funny, they all deserved the embarrassment.

QC your thought about not taking poor food out on the server made me think of something else. If we get a coupon and therefore get a meal free, or if the meal is removed from the bill for poor quality, we still tip based on what the bill would have been, assuming of course, that the service was good.

I know from experience that what you say about the taxman is valid. If service people do not declare tips that the IRS think is average, it will throw a red flag and an audit might occur.

All this said, there are also people who do not need to be service persons. During my tenure in food service I saw more than a few who tried, but just could not keep things under the pressure of trying to serve the public.

If any of my restaurant cohorts are reading, they may remember a Friday or Saturday night that a salt shaker came flying in through the kitchen from the dining room. I knew we had some rough teenage clientele, so I went into the dining room expecting to confront them.

What I found in their place was a huge young man (at least he looked huge to me at the time) with his wife and children. He was shaking mad and I was just shaking, but it turned out that our newest waitress had taken their order over an hour before and never came back.

They had chosen our restaurant because it was their daughter's birthday and she want to come to us! So he took all he could before he just snapped. We got it worked out without bloodshed and in the end, the daughter seemed to enjoy her visit, but I don't think the waitress got a tip, at least not from them.

A few weeks later I had to offer her a tip that she was not cut out to be a waitress, at least in our restaurant. We both tried, but it was not to be. If she still lives in this area and reads this, I hope she went on to be a great accountant, teacher or manager. In later years, she may have gone back into food service, but at the time........

-- Posted by stevemills on Thu, Jul 9, 2009, at 8:43 AM

I am a generous tipper because I realize that the majority of the servers pay comes from tips. One point I do want to make is that the tip shoud be on the subtotal. In other words you do not tip on the sales tax. The sale is reported to the IRS and state authorities.

One local chain restaurant here is helpful enough to put the suggested amount of tip 15%=? 18%=? and 20%=? at the bottom of each check, however they are using the total amount INCLUDING sales tax as their basis for computation. This is also the chain that automatically charges you a 20% tip on CURBSIDE TO GO orders even when you go inside to get your order. Come on now a 20% automatic tip on a to go order, just how greedy is that? And the sad part of it is that it is not even mentioned to the customer. The only way I found out is when my to go order was more than I expected, I asked why, and she said, "oh, I put the tip on the check."

-- Posted by justwanaknow on Sat, Aug 15, 2009, at 8:15 PM

I have always thought that tipping should be outlawed. Restaurant owners by nature are cheap. The more you throw out the back door, the less you make. If wait staff were paid a decent wage, you would get good service, and the owners cost would not be that much higher. Tips are a way for the owner to lower their labor cost at our expense. What really irritates me is when I eat at a buffet. Even if I get my own drink at the drink fountain, I am expected to tip. For what? Cleaning tables....give me a break. I also resent tips being shared with cooks, prep and bussing personel. The owner should pay for these people, not the customer...I am all for wait staff being paid a fair wage, but not at my expense for a cheap owner.

-- Posted by chs61 on Sun, Aug 16, 2009, at 12:07 AM

I am not sure that cheap is the description for most restaurant owners. Frugal, cost controlling, willing to take advantage of laws that allow tip credit may all apply though.

When I managed restaurants, labor was always my Achilles's heel because I tried to be fair. When my service persons were not able to make tips like opening or closing duties and sometimes between 2-4PM, I would change their hours to cook hours. That resulted in higher than approved labor costs and the home office always griped.

Tips in small towns are not known for being extravagant, so their tips rarely made up the difference to give them minimum wage. Our daughter is experiencing even in a larger town like Murfreesboro.

-- Posted by stevemills on Sun, Aug 16, 2009, at 12:01 PM


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Steve Mills and his wife have one daughter and live on a farm outside of Bell Buckle. They previously owned two coffee/ice cream shops, currently operate an internet sales company and teach classes, but his primary job involves the paper industry worldwide. Hobbies and interests lie in gardening, photography, recorded music and of course, their pets.