Sunday, February 15, 2009

Tip laws draw new scrutiny

Raise a glass in sympathy to the industry’s public affairs officers. It’s bad enough they’ll be rooting for days through Congress’ stimulus package, looking for possible boons to their companies or the business overall. Now there’s the Whack-a-Mole marathon that statehouses commenced last week, with new tip bills popping up faster than peanut product recalls. And if their chain has any restaurants in the U.K., they might as well start pounding the Red Bull right away. Cut with a little vodka, perhaps.

Most of the proposals deal with the tip credit, a provision of wage-and-hour laws that assumes servers earn most of their income in gratuities. In states where a credit is on the books, employers have to pay only a portion of the mandated minimum wage, with the rest coming from what customers leave on the table as tips. Many of the jurisdictions follow federal law, which requires employers to pay tipped staffers only $2.13 an hour, compared with the full minimum of $6.55.

The waiter, waitress or bartender makes no less than he or she would if they collected the full minimum wage—and, indeed, they often make considerably more. Rather, the credit merely allows some of that pay to come directly from patrons.

But movements afoot in states like Maine, Kansas and Missouri aim to change that situation, which has been the norm in all but eight states since the 1980s. Labor proponents say it’s unfair for servers to collect only a small fraction of what their non-tipped colleagues are paid under state wage requirements. Whatever they get in tips, the advocates argue, is icing on the cake, a gift they should be entitled to keep in addition to their hourly pay.

Restaurants, of course, argue that they can’t afford to pay more in wages right now. Some also point out that the traditional tip is 15%, whereas the profit margin for most restaurants is in the single digits, and often under 5%.

Indeed, the trade cited its dire economic conditions in trying, unsuccessfully, to institute a tip credit in Montana. The proposal was just defeated in the state Senate by a 29-21 bipartisan vote.

The industry was more successful earlier this month in Wyoming, beating back a proposal to adjust the tip credit there. The measure would have raised the hourly minimum wage for servers by $3 an hour.

Yet to be decided is a proposal in Maine, where a new union-like group patterned after one in New York City, the innocuous-sounding Restaurant Opportunities Center, is pushing to raise the minimum wage of servers to 60% of the mandated rate for other workers. The current floor for servers is 50% of the full hourly wage.

A measure under consideration in Kansas would raise servers’ minimum to $4.35, from the current $2.13.

In Hawaii, restaurateurs are leading the charge to change the state’s tip credit, which allows them to lower servers’ minimum pay by just a quarter an hour, to $7. They’re arguing that the island state’s laws shouldn’t be out of sync with the pay scale of the mainland, and cite the long and growing list of restaurants that have been shuttered there by the economic freefall.

If you ask me, both sides have compelling arguments, given the state of the economy. There just aren’t enough dollars going into restaurants, so employers and employees are trying to adjust the split in whatever way is most favorable to them. It’s understandable, just not easily resolved.

So let’s hope those public affairs officers find plenty of hopeful indications within the stimulus package. In the meantime, send ‘em a whole bottle of the good stuff. Charge it to the bankruptcy lawyers, whose industry seems to be the only one doing better in this environment.

5 comments:

George said...

The truth about tip credits.

Let me make this simple for you.

If a workers receives $1 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $5.55 an hour.

If a workers receives $2 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $4.55 an hour.

If a worker receives $3 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $3.55 an hour.

If a worker receives $4 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $2.55 an hour.

This is a fact, If you question what I am saying you can easily contact the US Department of Labor and substantiate such facts for yourself. This is the way the federal tip credit works.

What these facts actually prove is,

The tip credit is a law that allows employers to retain the tips their workers have received. Rather than the customer's tip increasing the income of the workers, the customer's tip, in many cases, will simply increase the income of his employer. The tip credit is a law that allows employers an ability to benefit themselves to the customer's private property, his tip.

While an employee who receives $4 an hour in tips will go home with minimum wage and subsequently no more than he would have had customers not tipped him, his employer will see a $4 an hour savings in payroll expenditures thus gaining the employer an increase in personal income of $4 an hour.

While an employee who receives $3 an hour in tips will go home with minimum wage and subsequently no more than he would have had customers not tipped him, his employers will see a $3 an hour savings in payroll expenditures thus gaining the employer an increase in personal income of $3 an hour.

The question that remains is, who authorized our federal government to give over the customer's private property, his tip, to business owners? The truth of the matter is, our Constitution does not support the idea that our government should be able to pass laws which blatantly steal our citizen's private property for special interests. While our constitution does support the idea of utilizing private property for public use, the tip credit is a law that utilizes the public's private property for private use.

The federal tip credit must be repealed on the grounds that it is a law which unconstitutionally utilizes the public's private property, their tips, for the benefit of special interests, namely restaurant owners. While our constitution supports the use of private property for public reason, our constitution prohibits the use of private property for the benefit of special interests such as a well organized group of business owners willing to bribe our elected officials for special treatment.

George said...

The truth about tip credits.

Let me make this simple for you.

If a workers receives $1 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $5.55 an hour.

If a workers receives $2 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $4.55 an hour.

If a worker receives $3 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $3.55 an hour.

If a worker receives $4 an hour in tips, his employer may reduce his minimum wage from $6.55 an hour to $2.55 an hour.

This is a fact, If you question what I am saying you can easily contact the US Department of Labor and substantiate such facts for yourself. This is the way the federal tip credit works.

What these facts actually prove is,

The tip credit is a law that allows employers to retain the tips their workers have received. Rather than the customer's tip increasing the income of the workers, the customer's tip, in many cases, will simply increase the income of his employer. The tip credit is a law that allows employers an ability to benefit themselves to the customer's private property, his tip.

While an employee who receives $4 an hour in tips will go home with minimum wage and subsequently no more than he would have had customers not tipped him, his employer will see a $4 an hour savings in payroll expenditures thus gaining the employer an increase in personal income of $4 an hour.

While an employee who receives $3 an hour in tips will go home with minimum wage and subsequently no more than he would have had customers not tipped him, his employers will see a $3 an hour savings in payroll expenditures thus gaining the employer an increase in personal income of $3 an hour.

The question that remains is, who authorized our federal government to give over the customer's private property, his tip, to business owners? The truth of the matter is, our Constitution does not support the idea that our government should be able to pass laws which blatantly steal our citizen's private property for special interests. While our constitution does support the idea of utilizing private property for public use, the tip credit is a law that utilizes the public's private property for private use.

The federal tip credit must be repealed on the grounds that it is a law which unconstitutionally utilizes the public's private property, their tips, for the benefit of special interests, namely restaurant owners. While our constitution supports the use of private property for public reason, our constitution prohibits the use of private property for the benefit of special interests such as a well organized group of business owners willing to bribe our elected officials for special treatment.

George said...

The tip credit must be repealed.

Our government has passed a law that allows business owners to steal the customer's tip.

While customers who tip are intending to benefit the workers to whom they tip, our federal government has passed a law which, in effect, allows business owners to steal the tips customer's give their workers.

Image if an employer was allowed to take $4.00 an hour away from an employee who received $4.00 an hour in tips. The result would be, the employee would take home minimum wage and no tips, or $6.55 an hour.

Now look at what the federal tip credit does. The employer of an employee who receives $4.00 an hour in tips can reduce the employee's minimum wage from $6.55 an hour to $2.55 an hour so that the employee goes home with his $4.00 an hour in tips plus an additional $2.55 an hour in hourly wages.

The thing is, in both cases the employee is going to go home with $6.55 an hour, or minimum wage.

It makes no difference whether employers are allowed to lower an employee's minimum wage by $4.00 an hour or whether employers are allowed to directly take $4.00 an hour in tips away from the employee, for in both cases, the tips customers have presented this particilar employee cease to benefit the employee and instead end up financially benefiting his employer.

The tip credit is a law that allows business owners to indirectly steal the tips customers present their workers.

Proof of this assertion.

Think about what would happen if the customers who were tipping this particular employee were to suddenly stop tipping this particular employee.

The employee would still go home with $6.55 an hour. The employee would lose nothing if customers stopped tipping him. The way the tip credit works is, employers must pay an employee $6.55 an hour if he receives no tip income. What this means is that if customers were to stop tipping the employee $4.00 an hour, the only one who would be adversely effected would be his employer who would now have come out of his own pocket with $4.00 an hour to pay his employee.

What it also means, however, is that the customer's tip, in this particular instance, is only benefiting the employer. The employer is receiving a $4.00 an hour reduction in staffing costs when customers tip his employee. The employer is thus benefiting $4.00 an hour from customers tipping his employee. Only the business owners will lose anything if customers stop tipping his employee.

What this clearly illistrates is that when an employer is allowed to take a tip credit, he is, infact, allowed to take the customer's private property, his tip.

If this assertion were incorrect, the employee would see a lose of income if customer's stopped tipping. Since only the employer, in this particular instance, will see a decrease in revenues if customers stopped tipping, it is proven that, in such an instance, it is the employer, not the employee, who is benefiting from the tips customer present.

Rather than writing a law that clearly states employers may steal up to $4.42 an hour from each employee who receives tips, our federal government wrote a law in a cryptic and deceptive manner to where customers would not realize that our government had passed a law giving over their private property, their tips, to business owners.

All I can say is, the cats out of the bag. We need let our politicians know that we know what they have done. They have stolen the public private property for the benefit of special interests, most notably, restaurant owners.

The workers in the service industry are the big losers in this injustice. While customers are tipping billions of dollars a year to supplement the incomes of some our lowest income earning workers, our government has stolen the money and given it over to business owners.

The tip credit is nothing but fraud and corruption on the grandest scale ever.

If we let them get away with this kind of corruption what will it lead to?

mattinfernus said...

Good article, my only comment is that this law is being used in regards to pizza delivery drivers as well.


Domino's and Papa John's, as well as many independent pizzerias, have their hand in the driver's tips too, and that's compounded by other issues, such as "delivery charges" that mislead the customer into thinking that part of the tip is included, and the public's general tendency to tip delivery drivers less than 'restaurant standard' for waitstaff.

George said...

The truth of the matter is, employers shouldn't have anything to do with customer tips. Since tips are the customer's private property, businesses shoud be prohibited from implementing any type of policy or rule concerning tips.

Business owners have been trying to steal the customer's tip for as long as customers have been tipping.

We have passed laws which attempt to prevent businesses from stealing the customer's tip, however, the laws are powerless in the hands of openly corrupt judges who could and have twisted and misinterpreted the law to appease these special interests.

Take for instance California labor law. While California labor laws specifically instruct that no employer shall take, collect or receive any part of the gratuities paid, given or left an employee by a patron, several judges in California have ruled that an employer who collects and appropriates the customer's tip through a mandated tip pool, is not taking or collecting gratuities.

This is but one illustration of the blatant lies judges will propagate in an effort to render our labor laws unenforcable to a point where special interests may violate them at will.

Our judges along with our government officials have gone past the point of no return. They have incriminated themselves to the point where they cannot come clean or even attempt to clean up the mess they have created without exposing themselves as a main component in this blatant corruption.