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Tip-Outs, Tip Pooling, Credit Card Fees, Etc


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#1 greycoral

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Posted 12 October 2007 - 02:15 AM

I have been a restaurant server for the last four years and my current employer is doing some things that I consider to be a little odd. What do you think?

1. They automatically claim 10% of my sales as my tips.
2. They take out the fees that are charged by credit card companies out of my charged tips.


Now, I am actually one of the few servers who claims everything I make, after I tip out. I like to know exactly what I'm making per year, and I want to make sure I don't owe anything. I had some issues with taxes last year, and ended up owing thousands. The fact that they bypass my numbers I put into the computer and enter their own pisses me off. Isn't that between me and the IRS?

And the fee thing...I know it's legal. I've been doing some research. But I've NEVER had any restaurant I worked in do that. I know it's minimal, but on an average night, I'm getting 5 or 6 bucks taken out. That sucks when I have tables who have multiple cards and I have to split the check! I had a table the other night, it was a party of 12, and they literally gave me 12 cards to run. I told them I couldn't do that many, and they all ended up having cash in the end. Hmmf! On a slow night, I need every dollar I can get. Is this a normal practice for employers to take out their fees from the servers tips? I can understand in a small restaurant why you would need to, but I guess I've always worked in busier places.

I guess the thing that kinda upsets me is that i wasn't informed of either practice. I've just been paying attention to my checks and server reports and noticed the discrepancy. I keep immaculate records of everything I make!
--Coral

#2 Amanda

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Posted 12 October 2007 - 05:56 AM

DISCLAIMER: I've never worked in a restaurant so I'm not that familiar with what is common in the business, but I know plenty of people who have and do work in that industry.

I've heard of restaurants claiming 10% of a server's sales as tips. My boyfriend's oldest daughter has been a waitress forever and even though she has always kept a tip book, some places do this automatically.

As far as taking the credit card fees out of YOUR wages that's F*%@d Up! I don't know if that is a standard practice or not, but it sure sounds bogus to me. I'd definitely challenge that one! Credit card fees would seem like a part of the cost of doing business the restaurant itself should incur not the waiter. I'm now curious how this works. Others chime in, please???

Best regards,

Amanda

#3 Jeff

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Posted 12 October 2007 - 06:49 AM

That sucks when I have tables who have multiple cards and I have to split the check! I had a table the other night, it was a party of 12, and they literally gave me 12 cards to run. I told them I couldn't do that many, and they all ended up having cash in the end.

Le Pigeon is fighting that with the following quote at the bottom of their menus:

"no more than 2 methods of payment per party"

Seems like a good policy.....

#4 gal4giants

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Posted 12 October 2007 - 09:35 AM

1. They automatically claim 10% of my sales as my tips.
2. They take out the fees that are charged by credit card companies out of my charged tips.


Holy crap.....As for the 10% of sales.....this is the law. I thought it was 8% BUT they have to do it. Any shop with 10 or more employees.

Taking out the fees for tips....um....that's just brutal! I have heard of places doing this, don't know if it's legal or not, regardless it's evil. For our shop...it costs us about 3,000.00 + in fees just for tips, annual. That is a good chunk of change for 1 expense that doesn't benefit the owners if the owners are only concerned with the bottom line. We consider it part of the employee expense though...it comes to what.....$13 a day.

kim @ apizza

#5 greycoral

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Posted 12 October 2007 - 10:10 AM

My complaint about the tips is that I claim MORE than 10% to cover my ass. That's why I have a problem with it. I don't know what happened with the tax thing before, but I didn't have enough taken out and owed almost $3K. That was devastating. I thought if I reported my true income, I'd be fine. That's why it irritates me that they are taking out LESS than what I am claiming. I know, I know, it sounds silly to complain, but I'm just nervous.
--Coral

#6 Guest_MostlyRunning_*

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Posted 12 October 2007 - 10:17 AM

Regarding the fees for tips, I broke up with a restaurant in NY over that (and a litany of other things). Like Kim, I consider it a cost of doing business, especially when servers fall outside standard minimum wage.

I refuse to dine with groups that can't simply pay with cash, 1 check or 1 cc on one bill. Multiple checks or multiple credit cards is just disrespectful to the server and the restaurant.

#7 greycoral

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Posted 12 October 2007 - 10:19 AM

Yeah, the fee thing is a bunch of BS. It really makes me angry. But I did some looking around and I found several examples of servers taking the business to court for it, and the business owner always wins. The other thing with splitting checks, at least in my experience, is the tip always seems to drop when you split things up. I don't have any idea why. It seems like if you had a smaller bill, you'd be inclined to tip higher!
--Coral

#8 Stinky Cheese

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Posted 12 October 2007 - 11:10 AM

I've had one employer in Portland who charged servers the credit card fee % on their tips. It ain't that much money, and it's a tough town to find a decent gig, so I put up & shut up.

All sorts of little things add up and cost owners a lot, but as an employee, it can seem really petty and it's easy to feel nickel and dimed. I worked in one small, family-run place that suddenly announced we had to pay half price on our staff meals, which were always free before, and if we had more than one glass of sody pop, we were supposed to pay full price for it. I wouldn't have felt too resentful about it if the owner hadn't chosen that evening to tell us what a tough time he was having deciding which unnecessary luxury item to buy for his home, the $4000 one or the $6000 one. Ha.

Its funny to find this thread today, as I was wondering about contacting BOLI over a few things that are a lot worse than paying for soda. Here's one:

One of my employers always pulls this bullshit with my check: I'll work, say, 60 hours in a two week pay period, and my check will be for 34 hours or 40 or maybe even just 18. He'll mumble a bunch of crap about straightening it out later, pull out a huge wad of cash, and pay me the balance of my wages in cash.

Some of my coworkers like that system, as they don't have taxes taken out, etc. But we're not getting FICA or unemployment paid on those hours either, and how am I gonna prove my income when I need to rent an apt, or apply for a loan or whatever?

There are a lot of restaurants in this town that pay under the table for support positions in FOH (host, backwaiter, busser) and act like they're doing you a favor. I don't feel so great about it, but then again, I was always the kid who didn't want to get in trouble with the grown ups. Am I the only one who wants to get paid on the up and up and pay all my taxes, etc.?

#9 gal4giants

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Posted 12 October 2007 - 05:32 PM

I have been a restaurant server for the last four years and my current employer is doing some things that I consider to be a little odd. What do you think?

1. They automatically claim 10% of my sales as my tips.
2. They take out the fees that are charged by credit card companies out of my charged tips.


Now, I am actually one of the few servers who claims everything I make, after I tip out. I like to know exactly what I'm making per year, and I want to make sure I don't owe anything. I had some issues with taxes last year, and ended up owing thousands. The fact that they bypass my numbers I put into the computer and enter their own pisses me off. Isn't that between me and the IRS?

And the fee thing...I know it's legal. I've been doing some research. But I've NEVER had any restaurant I worked in do that. I know it's minimal, but on an average night, I'm getting 5 or 6 bucks taken out. That sucks when I have tables who have multiple cards and I have to split the check! I had a table the other night, it was a party of 12, and they literally gave me 12 cards to run. I told them I couldn't do that many, and they all ended up having cash in the end. Hmmf! On a slow night, I need every dollar I can get. Is this a normal practice for employers to take out their fees from the servers tips? I can understand in a small restaurant why you would need to, but I guess I've always worked in busier places.

I guess the thing that kinda upsets me is that i wasn't informed of either practice. I've just been paying attention to my checks and server reports and noticed the discrepancy. I keep immaculate records of everything I make!


8% was the standard minimum that a restaurant was required to claim. Maybe it has changed, or maybe your restauranteur was audited previously and decided to increase the minimum as a house policy.

I was always under the impression that a restaurant that was attempting to reclaim the 2%+ charge on tips, which is deducted by the credit card processing company, was performing an illegal act. If it is legal, then it is petty. A restauranteur should figure all costs of running the business and factor them into the charge for the meal. Simple rule of running a business, really.

Brian Spangler
Apizza Scholls

#10 chris pez

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Posted 12 October 2007 - 06:06 PM

we let our employees run the tips through the CC machine at the end of the shift and tip themselves out of the till. we don't charge them anything for the CC fees or for the amount we're taxed on tips, but then we only have four employees and the pay ain't great. so it's nice to have some additional perks (like 25% off booze).
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#11 dretceterini

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Posted 12 October 2007 - 08:22 PM

Am I the only one who wants to get paid on the up and up and pay all my taxes, etc.?


Not the only one, but I'll bet it's less than 5% of the people in the industry...

#12 greycoral

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Posted 12 October 2007 - 09:13 PM

I was always under the impression that a restaurant that was attempting to reclaim the 2%+ charge on tips, which is deducted by the credit card processing company, was performing an illegal act. If it is legal, then it is petty. A restauranteur should figure all costs of running the business and factor them into the charge for the meal. Simple rule of running a business, really.

Brian Spangler
Apizza Scholls



yeah, exactly what I thought. Kim knows where I work, if you are curious. There's just no need for this specific place to be charging for that crap.
--Coral

#13 sfspanky

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Posted 12 October 2007 - 09:45 PM


I was always under the impression that a restaurant that was attempting to reclaim the 2%+ charge on tips, which is deducted by the credit card processing company, was performing an illegal act. If it is legal, then it is petty. A restauranteur should figure all costs of running the business and factor them into the charge for the meal. Simple rule of running a business, really.

Brian Spangler
Apizza Scholls



yeah, exactly what I thought. Kim knows where I work, if you are curious. There's just no need for this specific place to be charging for that crap.


Yes, Kim told me where you work, and I am a little surprised.
Brian Spangler
Apizza Scholls

#14 Stinky Cheese

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Posted 06 December 2007 - 12:49 PM

I've got questions about tips/tip-pooling, and I couldn't easily find the info I wanted on the BOLI website.

There's a place that pools tips, gives a very substantial % to the kitchen, and splits the rest amongst the servers.

The place is owned by a family. One family member does accounting for the place, and two are managers. The managers fill in on the line or the floor whenever a shift isn't covered.

On a busy evening, one of the managers will step in to bus, seat guests, schmooze a bit, and even take a table or two if it'll speed things up.

The other manager schedules themself as a server a day or two each week, but they come in at least 1 hour later than other servers working that position. They take fewer tables than the other servers so that they can work the room and schmooze a bit, and they leave all that closing-up and sweeping bullcrap to the staff.

The 1st manager never takes tips.
The 2nd manager takes a full server's cut on their 'scheduled' nights. This person does the scheduling for
FOH and performs other managerial duties.

This is obviously unethical, but is it illegal? Can anybody direct me to an online source that would help explain?

#15 ExtraMSG

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Posted 06 December 2007 - 01:20 PM

If the manager is also an owner, it's illegal for sure, unless it's a service charge or gratuity included in the bill. A couple FAQs:

http://www.dol.gov/e...whd/whdfs15.htm

http://www.ora.org/G...tip_pooling.htm

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#16 Snarky

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Posted 06 December 2007 - 02:39 PM

According to the ora.org page Nick linked to, sounds like this establishment is Breaking the Law! Employer mandated tip pooling and sharing pooled tips with kitchen staff are no-nos.

#17 ExtraMSG

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Posted 06 December 2007 - 03:31 PM

I really should buy a Judas Priest CD for latenight. Plus, it's Stark St.

The greatest service chemistry has rendered to alimentary science, is the discovery of osmazome, or rather the determination of what it was. ~Brillat-Savarin

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#18 Stinky Cheese

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Posted 06 December 2007 - 11:38 PM

Well, maybe I'm dense, but what I read there said that the owner/manager person isn't allowed to take a portion of an individual server's tips.

But if the owner/manager of a restaurant where each server keeps the tips from their own section takes a section of tables and works as a server, can s/he keep her/his tips from her/his tables?

And if all the servers in a restaurant pool their tips and split it at the end of the night, an owner/manager who has taken some tables is not allowed to take a cut of pooled tips?

Yeah, we all know that making servers tip out the kitchen is technically illegal, but I've never worked anyplace that didn't make servers tip the kitchen.

Well, actually, I worked ONE place that didn't make us tip out anybody but the asshole maitre d'. The kitchen expected us to buy them plenty of after-shift alcohol though.

#19 greycoral

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Posted 07 December 2007 - 05:35 PM

we have a bar manager who works where I work, but he also works as the dinner service bartender. He's salaried and gets tips.

we also tip out the kitchen 1% of our nightly sales (minimum).
--Coral

#20 ExtraMSG

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Posted 07 December 2007 - 06:19 PM

You can encourage BOH tipouts, you just can't force people, legally, to tip out. I couldn't, eg, fire someone because they tipped out low. When I take tables or take the counter, I always distribute the tips equally among whoever is working. Even if I could take tips legally, it just seems weird for me to do so.

The greatest service chemistry has rendered to alimentary science, is the discovery of osmazome, or rather the determination of what it was. ~Brillat-Savarin

Nick Zukin, Mi Mero Mole

Co-Author, Artisan Jewish Deli at Home

Formerly, Kenny & Zuke's