Tips and the Service Industry.

[Espy]

I know we've had some great rages here about tipping and people who love to tip, people who think tipping is for dumbasses and people who love to cow-tip, but this is a new one:
A local restaurant management group has had the news leaked that they intend to start taking 2% of waiters Credit Card tips. They say it is to help cover the cost of credit card processing. This will affect around 150+ waitstaff who work for their various restaurants at minimum wage.
Before people say, "Why don't they just raise prices?", well thats happened as well.
So what say you halforums? Good idea? Bad idea? Seem reasonable or reason to revolt? Is there a legal issues here? Does the management have the right to that money?
If you work in the service industry your views have particular weight here since this could be you at some point so please note the different polling options.

 

[Shegokigo]

As a server and bartender for many years, I can tell you that a very large portion of servers do NOT get minimum wage + tips. If a server reports their tips and make a certain amount, the restarurant will withdraw the minimum wage and pay them nothing. I can't tell you for how many years I recieved a check with a big VOID where the amount should be. Now the Credit Card companies are going to dip into that too? Servers are already one of the lowest rungs on the totem pole as far as wages are concerned and now this? Count me in the 100% against category.

 

[Chibibar]

I use to work as a waitstaff at various places. Base page in Texas is $2.13 and hour and that hasn't change in a long time until this year. I think it is up to $2.35/hr
I can tell you I pretty much survive on tips. $2.13 an hour? that goes to my taxes and such. Dipping another 2% on waitstaff is a low blow since the business is RAISING pricing to cover their CC cost (and other things)

I'm totally against this.

 

[Espy]

As a server and bartender for many years, I can tell you that a very large portion of servers do NOT get minimum wage + tips. If a server reports their tips and make a certain amount, the restarurant will withdraw the minimum wage and pay them nothing. I can't tell you for how many years I recieved a check with a big VOID where the amount should be. Now the Credit Card companies are going to dip into that too? Servers are already one of the lowest rungs on the totem pole as far as wages are concerned and now this? Count me in the 100% against category.

This is true, thats why many don't report all their tips.

 

[Shegokigo]

Yet if you don't report your tips, you get shit on when income tax season comes around. It's lose-lose.

 

[Espy]

Sorry, I changed the poll, for some reason it left out the other 2 options.

 

[Chibibar]

Yet if you don't report your tips, you get shit on when income tax season comes around. It's lose-lose.

Cash baby. If it is credit card tip, I do report it (no way around it) but if it cash, generally I don't report it

 

[Shegokigo]

I'd rather lose out on the extra $20 a check to get a 500-700$ check on income tax returns. I reported full tips.
Added at: 15:33
Not to mention if you ever needed to apply for a loan, if you didn't report your full tips, your total income looked pathetic and qualifying for anything would be next to impossible.

 

[Chibibar]

I'd rather lose out on the extra $20 a check to get a 500-700$ check on income tax returns. I reported full tips.
Added at: 15:33
Not to mention if you ever needed to apply for a loan, if you didn't report your full tips, your total income looked pathetic and qualifying for anything would be next to impossible.

Heh. luckily those days are WAY behind me (over 20 years) but yea. You should report full but man, those were hard times.

 

[strawman]

Credit card processing fees are 1.5% to 3%, so I can understand the restaurant passing on the cost of the tip's fees to the waitstaff. Even if they receive a $20 tip on a $100 meal, the waitstaff is only down by $0.40 for that tip. The restaurant still has to pay the $1.00 fee for their $100 worth of CC processing for that order.

Do they expect the employer to pay the full credit card processing fee for their tips? If they were salaried, then sure, but they are receiving cash directly from the customer - except in this case they are forcing the employer to pay for the credit card machines, and the fixed fees (monthly and per transaction). It would be no different if they each carried their own credit card machine around and had their tip run through that (say, square, or paypal, etc) and the food costs run through the employer's machine.

Why should the restaurant cover it?

 

[Shegokigo]

Because the average waitstaff waiter makes less than $18,000 a year?
Added at: 15:48
or in a large majority of cases (of my personal circle) less than $15,000?

 

[strawman]

And? Why does that bear on whether the restaurant should cover their credit card processing expenses?

 

[Shegokigo]

Because according to alot of polls that's nearly if not already poverty levels. Should they be taxed further because their employer, who already takes away their regular paycheck due to their tips, doesn't want to cover it?

 

[strawman]

Because according to alot of polls that's nearly if not already poverty levels. Should they be taxed further because their employer, who already takes away their regular paycheck due to their tips, doesn't want to cover it?

They're working full time (ie, 40 hours a week) and they are only making $18,000 per year, and they have no other means of assistance (school funds, other work, spouse, family, etc)?

Then the problem isn't that the restaurant is charging them $8/month to process their tip transactions, the problem is that they need a job that will support them.

If they are working full time (40/hr week) then $18k is the minimum they should be getting, as well as medical and other benefits. If they are working less than full time, they need a second job.

If $100/year is going to make or break them, they should switch careers.

Did they not know that going into waiting was not going to make them much money?

 

[blotsfan]

The restaurant should make people pay more if they spend with a credit card if they really can't afford the hit. I know if I ever went to that restaurant, I'd tip with cash.

 

[makare]

Most people do that job because they can't get another one. It isn't many people's life ambition.

 

[blotsfan]

They're working full time (ie, 40 hours a week) and they are only making $18,000 per year, and they have no other means of assistance (school funds, other work, spouse, family, etc)?

Then the problem isn't that the restaurant is charging them $8/month to process their tip transactions, the problem is that they need a job that will support them.

If they are working full time (40/hr week) then $18k is the minimum they should be getting, as well as medical and other benefits. If they are working less than full time, they need a second job.

If $100/year is going to make or break them, they should switch careers.

Did they not know that going into waiting was not going to make them much money?

Sorry for the double post but sometimes people can't find a better job.

 

[Chibibar]

Credit card processing fees are 1.5% to 3%, so I can understand the restaurant passing on the cost of the tip's fees to the waitstaff. Even if they receive a $20 tip on a $100 meal, the waitstaff is only down by $0.40 for that tip. The restaurant still has to pay the $1.00 fee for their $100 worth of CC processing for that order.

Do they expect the employer to pay the full credit card processing fee for their tips? If they were salaried, then sure, but they are receiving cash directly from the customer - except in this case they are forcing the employer to pay for the credit card machines, and the fixed fees (monthly and per transaction). It would be no different if they each carried their own credit card machine around and had their tip run through that (say, square, or paypal, etc) and the food costs run through the employer's machine.

Why should the restaurant cover it?

Logically speaking, they don't have to.

But considering that most waitstaff doesn't earn that much per hourly, it would be a good will gesture toward their staff. Yea $0.40 is not much, but it does add up. If the restaurant wasn't going to raise their prices to cover the cost, then I may incline to chip in.

but raising the price to cover cost AND "gouging" their waitstaff? that is a bit greedy IMO.

 

[Shegokigo]

They're working full time (ie, 40 hours a week) and they are only making $18,000 per year, and they have no other means of assistance (school funds, other work, spouse, family, etc)?

The majority of people I knew in the industry did not have assistance AND they had a kid or two they were raising on their own. Also, are you saying that a company should tax a povertish employee more, because they have outside assistance just to get them by?

Then the problem isn't that the restaurant is charging them $8/month to process their tip transactions, the problem is that they need a job that will support them.

You're totally right. The people who have those jobs are those who dreamed their whole lives to get it and are living the dream.

If they are working full time (40/hr week) then $18k is the minimum they should be getting, as well as medical and other benefits. If they are working less than full time, they need a second job.

Except the medical benefits that a restaurant offers, only offers it by taking out of their paychecks, which they already don't get.

If $100/year is going to make or break them, they should switch careers.

See two replies up.

Did they not know that going into waiting was not going to make them much money?

I'm starting to feel like a broken record but you did reply the same thing 3x.
Added at: 16:06
My proxy won't let me edit that horrible mess, so if a mod could go in and clean that up, much appreciated. If not, oh well, I can't even delete it.

 

[strawman]

Most people do that job because they can't get another one. It isn't many peoples life ambition.

Sorry for the double post but sometimes people can't find a better job.

Ah, so the restaurant is a charity organization. Gotcha.

I agree that the restaurant should simply consider it a business expense and cover it for the waitstaff. I disagree with those who say that the restaurant is doing something wrong, ethically or morally, by sharing the expense with the waitstaff.

The only rub I have is that the processing fee should be taken prior to the minimum wage calculation - the restaurant should be paying them at least minimum wage take-home, after tips and processing fees are calculated.

 

[AshburnerX]

If they are working full time (40/hr week) then $18k is the minimum they should be getting, as well as medical and other benefits. If they are working less than full time, they need a second job.

I have NEVER heard of a waiter getting benefits of any kind, ever, in the United States. They usually just schedule you for an hour short of full time so they don't have to pay the expense. Unless your waiter can speak more than one language and is impeccable otherwise you simply can't justify the expense. It's a huge overhead in a market that already operates on razor thin margins.

Also, getting a second job really isn't going to help you if your still pulling in less than minimum wage at your other job. If your waiting tables, chances are the only other job you can get is waiting tables. If you could get a job better than waiting tables, you wouldn't be doing it.

The only rub I have is that the processing fee should be taken prior to the minimum wage calculation - the restaurant should be paying them at least minimum wage take-home, after tips and processing fees are calculated.

I believe restaurants have a legal protection that lets them get away with not paying minimum wage and I believe it's because employees can collect tips (but don't quote me on that).

 

[strawman]

Are you all really going to argue that the restaurant owes waitstaff a full living?

* Some people enjoy waiting, and that is their career. They have to organize their life so that their career supports them.
* Some people merely want a part time, no strings attached job, with a reasonably low learning curve to fill in extra time and bring in cash to supplement their current lifestyle, such as students.
* Some people, for whatever reason, are waiting, don't enjoy it, and find that it doesn't meet their expenses.

Waiting is perfect for the first two groups.

It is horrible for the third group.

Is it your argument that restaurants should cater to the third group of people, and operate what would essentially be a charity organization? I say charity in that they are not performing skills and work that is worth more than $16k/year.

 

[Chibibar]

Are you all really going to argue that the restaurant owes waitstaff a full living?

* Some people enjoy waiting, and that is their career. They have to organize their life so that their career supports them.
* Some people merely want a part time, no strings attached job, with a reasonably low learning curve to fill in extra time and bring in cash to supplement their current lifestyle, such as students.
* Some people, for whatever reason, are waiting, don't enjoy it, and find that it doesn't meet their expenses.

Waiting is perfect for the first two groups.

It is horrible for the third group.

Is it your argument that restaurants should cater to the third group of people, and operate what would essentially be a charity organization? I say charity in that they are not performing skills and work that is worth more than $16k/year.

I am not sure what approach are you taking this. I am not sure what waitstaff you hold before, but sometimes people can't get other job cause this might be the only thing they know.
While working at Denny's I met a couple of people where stay at home mom for a long while, but spouse lose the job, have kids, and have to work as waitstaff due to lack of other options. Some waitstaff do have 2nd job, but you know, even working nearly 40 hours a week as a waitstaff it is pretty hard work. I don't think I work harder in other job that including volunteer for Habitat for humanity or soup kitchen.

I am not sure why would you consider it Charity organization. I am at a lost on that one.
Lets assume a person work minimum at 2.13$ at 39 hours a week for 52 weeks (we don't close on holidays) that is 4319.64 a year prior to taxes. so lets say 18k a year that is around 13600 in tips for the year. That is 272$ a year in added expense which is around $23 a month. To you, it is not much. $23 dollar is like a meal for 2 or a movie and snacks, but when a person is barely scraping by and living already marginally, $23 is a lot of money. I use to live off Ramen and rice for a year. 23$ is a month worth of food for me.

While I agree that the restaurant are not obligated in anyways to "cover the cost" for their waitstaff, but I said it would be a good gesture since the waitstaff is already at the bottom of the barrel.

 

[strawman]

I am not sure what approach are you taking this.

My approach is simple. If I run a restaurant and I can get college kids to staff it for $2.35/hr plus tips, and they pay their portion of the credit card processing, then why would I hire people who cost more to do the same thing?

If I pay more and get the same thing, I am a charity.

I don't disagree with you all on the cost of living, and how much $23 means to someone scraping the bottom of the barrel. I'm hardly one to talk as we live a relatively wealthy lifestyle, but just yesterday we canceled our $8/mo netflix subscription, and we're taking the bare minimum car trips necessary, and making the baby go longer between diaper changes because we're in a tight spot this month.

But the value of money to the employee has no bearing on what the employer should be doing. They are paying the market rate for the skills and labor they are asking employees to complete. If they need more skilled employees, they pay a higher rate. The only reason they aren't paying less is because of minimum wage and our tipping custom.

The reality is that waiters are currently making more than what they are worth, as determined by the market. They are already propped up by the minimum wage system, and restaurant customers are already forced to pay more for this service than they would be worth in a truly unencumbered market.

It is charity, legislated by the government.

 

[Espy]

I agree that the restaurant should simply consider it a business expense and cover it for the waitstaff. I disagree with those who say that the restaurant is doing something wrong, ethically or morally, by sharing the expense with the waitstaff.

So you seem to think it's automatically ethical for or morally right for the business to force their staff to help pay for business expenses. Can you explain that to me? I've never had a job where I was forced to pay for business expenses out of my own personal money. Why is it "morally right" in the service industry? If you build a computer for a client do they expect you to pay a percentage of the electronics you buy? I'm not saying your argument is invalid but you are claiming there is a moral/ethical rule that says it's okay for them to do this and I'm trying to figure out where that comes from?

 

[Chibibar]

My approach is simple. If I run a restaurant and I can get college kids to staff it for $2.35/hr plus tips, and they pay their portion of the credit card processing, then why would I hire people who cost more to do the same thing?

If I pay more and get the same thing, I am a charity.

I don't disagree with you all on the cost of living, and how much $23 means to someone scraping the bottom of the barrel. I'm hardly one to talk as we live a relatively wealthy lifestyle, but just yesterday we canceled our $8/mo netflix subscription, and we're taking the bare minimum car trips necessary, and making the baby go longer between diaper changes because we're in a tight spot this month.

But the value of money to the employee has no bearing on what the employer should be doing. They are paying the market rate for the skills and labor they are asking employees to complete. If they need more skilled employees, they pay a higher rate. The only reason they aren't paying less is because of minimum wage and our tipping custom.

The reality is that waiters are currently making more than what they are worth, as determined by the market. They are already propped up by the minimum wage system, and restaurant customers are already forced to pay more for this service than they would be worth in a truly unencumbered market.

It is charity, legislated by the government.

customer are not force to pay any tip. As a previous waitstaff, I tip according to service. If I get bad service, I don't tip. Of course there are people out there who are cheap and don't tip anyways.
so I am not understanding how it is a charity, legislated by the government.

There are exception that some waitstaff make more (depending on the business)

 

[Sara_2814]

Are you all really going to argue that the restaurant owes waitstaff a full living?

When you live in a country with minimum wage laws? Yes.

Restaurants are not forced to accept credit cards, but they would probably lose business if they didn't. Credit card fees are an operating cost to provide a convenience to customers and should not be used to penalize an employee who gets a credit card tip rather than cash on the table. Being able to put the tip on the credit card rather than having to carry cash for tips is for the customer's benefit, not the employee's! It's the customer who decides whether to add the tip to the credit card or put cash on the table, so shouldn't it be the customer who pays the extra 2% for that convenience? Why penalize the employee?

People expect that their tips will go to their waitstaff. If they are going to do this, then they need to inform the customers that the restaurant will be taking a 2% fee out of credit card tips.

 

[Chibibar]

So you seem to think it's automatically ethical for or morally right for the business to force their staff to help pay for business expenses. Can you explain that to me? I've never had a job where I was forced to pay for business expenses out of my own personal money. Why is it "morally right" in the service industry? If you build a computer for a client do they expect you to pay a percentage of the electronics you buy? I'm not saying your argument is invalid but you are claiming there is a moral/ethical rule that says it's okay for them to do this and I'm trying to figure out where that comes from?

Heh. It is like business charging 200-300$/hr for a tech to service while the tech is only paid 25$/hr The company cover all the cost and thus get the extra money, but I can't see a company taking a percentage of the tech 25$/hr cause the rise in fuel (if the tech drive company car like Think Geek)
Added at: 11:24

When you live in a country with minimum wage laws? Yes.

Restaurants are not forced to accept credit cards, but they would probably lose business if they didn't. Credit card fees are an operating cost to provide a convenience to customers and should not be used to penalize an employee who gets a credit card tip rather than cash on the table. Being able to put the tip on the credit card rather than having to carry cash for tips is for the customer's benefit, not the employee's! It's the customer who decides whether to add the tip to the credit card or put cash on the table, so shouldn't it be the customer who pays the extra 2% for that convenience? Why penalize the employee?

People expect that their tips will go to their waitstaff. If they are going to do this, then they need to inform the customers that the restaurant will be taking a 2% fee out of credit card tips.

OOO... I would love to see a fine print on the receipt for THAT

 

[strawman]

So you seem to think it's automatically ethical for or morally right for the business to force their staff to help pay for business expenses. Can you explain that to me?

The tipping system in the US is a payment directly to the waitstaff. The customer is completing two transactions, for two services - one is the food preparation, and one is the delivery and customer care. Legally, the tip must go to the waitperson. Therefore the waitperson is running their own business, and should be willing to cover their own business expenses where the restaurant elects not to.

I'm not saying it's ethically or morally right or wrong. Why should ethics and morals have place in this discussion at all?

The waiter is running a business. They are able to sell their time and skills to whoever they choose. If they choose to be employed by a restaurant that requires them to pay their CC fees, then they accept those terms, or they find a different job, or they live unemployed.

Why must it be ethically right or wrong for a business to share the cost of some of their overhead with their employees?

Some businesses have a dress code. You can't simply wear your ratty old sweater while working - you have to pay for clothing that matches their guidelines.

This is business overhead - the cost of keeping up your end of the agreeement to be employed by that business.

Is it ethically or morally wrong to set these terms in this manner? I don't see it. It's simply a business relationship - you either like it and accept it, or you don't like it and you don't accept it.

Why penalize the employee?

To provide even greater value to the customers, obviously. Was that meant to be a trick question?

 

[Jax]

The real problem is not whether they are justified in doing it or not (though this is an important one of course), but why they started to do it now (and not before). Was there an increase in card processing costs to initiate this? Is the restaurant in financial trouble and are they looking for things to save money on? If not, then it just seems greedy, and I think thát is what people are against.

 

[strawman]

I'm interested to know what people's definition of greedy is, with regard to restaurants. Is there a limit to how much profit a restaurant can make before they are considered greedy? It just seems like a subjective word to use in order to form propaganda against an employee-unfavorable change.

I suppose it's greedy that the restaurant has a dress code and requires employees to buy, wash, and replace clothes they wear to work. I surprised the restaurant is so greedy that they don't cover footwear, which wear out more quickly as a waiter, and are more expensive to provide the proper support for the work load. The waiters use a lot of energy performing their duties, and the restaurant is so terribly greedy they don't even cover meals for them.

What a greedy business!

I say that waiters who don't like how greedy the restaurant owners are should quit their job.

Oh, right, they can't. For some reason they are unable to get another job, and they are chained to the restaurant to work as slaves for slave wages. They have no freedom to learn, grow, and obtain better employment.

-----------

Yes, there are extremes in every situation. It's not necessarily fair. I would prefer the restaurant to cover the cost as a normal part of their business. Vote with your pocketbook.

But to pretend that the entire waitstaff industry is staffed entirely by people who are single, have two children, have to pay $900/mo for a hovel, have no education, and such limited mental capacity that waiting is literally the best they can ever attain really seems insulting to the majority of the real employees in those positions.

 

[Shegokigo]

Again, I was only speaking from experience but majority of those real employees were the ones you described or students looking for part time work. Basically put, the kind of peole that majority work as servers, cannot afford to have more money taken from them because a business doesn't want to cover it's own working costs.

 

[strawman]

So essentially the business should pay more for employees even if they could get other employees who would work for less. And they should do this because their employees need more money than the business is offering.

What, exactly, does the business get in return for this additional cost when they have the choice between an employee that will pay for the fees, and one that requires the business to pay for the fees? Especially if the employee is still getting at least minimum wage, after the fees are figured in?

 

[Shegokigo]

The company has people do their work, and pays them nothing/next to nothing. There's no way to get employees to work for less. They're basically getting people to take the orders, take the food to the table, fullfill the customer's every request, be the cashier and give them the reciept + the change, and do all that for nothing. They don't give benefits anywhere near what most businesses do, and if the employee reports their full tips, the restraurant won't even pay them a check at all. What you're not understanding is that most restaurants do NOT pay the employee if they report tips. If they do, the restraunt pays the employee NOTHING.

 

[strawman]

Oh, and regarding "the kind of peole that majority work as servers, cannot afford to have more money taken from them"

Essentially if the business shut down, these people would die, right? They have no skills, not other positions, and no ability to deal with even pennies difference in their daily take home pay, right?

Further, what a stupid career choice, to depend completely on the hours they are scheduled and the tips they earn! Hardly a stable source of income!

The pennies they lose in credit card transactions are nothing compared to the normal ups and downs of that business!

Further, they are human - they will survive somehow. So many people here are painting such a bleak picture for these tortured souls, but it's hard for me to believe. They can get government assistance for job hunting, for education, for child care, for food, for housing, etc, etc, etc, at $18k/year. They need only reach out their hand and grasp it.

Of course it would require extra effort on their part, but we're literally talking about dollars per year in credit card transactions - it sounds like these people have much greater problems - this particular issue is the least of their worries!