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Tuesday, April 04, 2006

In civilised countries, such as New Zealand, tipping is not the norm. Traditionally, there, tipping has been regarded as an insult because it suggests that you regard the person providing a tip as a servant and not as an equal. But here in the US tipping is an ever present issue. How much? How to calculate? Leave cash or put it on the card?

A recent court decision makes that issue even more pointed.

You should be aware that just because you put an amount on your credit card designated as a tip does not mean the server gets it all.

Here are a few of the consequences of cash or card sticking with restaurants, the area where most of us face this issue.

Taxes

Employers deduct withholding taxes from all tips and assume that a server was tipped 15% of the bill. Fair enough, you may think. The untipped among us get withholding taken out from our pay.

But with tipped income the issues become much more complicated.

If you tip less and have left cash, the server will get zinged. If you tip more and have left cash, the server gets a windfall.

Minimum wage

Now a recent federal case from Illinois means that putting your tip on the card means that servers lose money. Every time you use a credit card, the merchant pays a credit card processing fee.

The new case held that an employer can deduct the credit card processing fee from the server's tip. The judge said that when a tip is put on a credit card, the employee does not receive a tip until the employer has paid it to the server.

Just to be clear, an employer cannot deduct the whole fee. All they can deduct is the percentage paid to the credit card company. So if you leave a $1 tip on a $7 bill and the credit card service fee is 2%, the server will have 2 cents deducted, and the employer will have 14 cents deducted. The case is Gillis v. Twenty Three E. Adams St. Corp. d/b/a Miller's Pub, Case No.04-4012 (N.D. Ill. Mar. 6, 2006).

So, how do you handle tipping?

It used to be said that the personal is political. What factors do you take into consideration when tipping? In addition to having someone at the table who is good at math or carries a calculator?

Comments

16 comments

[1]
"From each according to his ability, to each according to his needs."

That's my motto.

As one who believes in re-distribution of "wealth", and as one who, I assume, makes more than waitstaff, I divide by 5 to leave a 20% tip, or 4 to leave a 25% tip.

Posted by BobB at Tuesday, April 04, 2006 07:16:35

[2]
I waitressed both before and after the tip withholding tax was implemented. I saw an appreciable difference in my income though at the time, my employer was not passing the credit card transaction fee on to the wait staff.

I'll be sure to leave cash from now on.

Posted by em dash at Tuesday, April 04, 2006 10:37:59

[3]
My tipping method:

Multiply the tab by 10% and double it at a minimum. Usually, I leave 25% (by rounding up to the next whole dollar). I fairly regularly leave 30% for excellent service.

I have to say that I do like the European custom of simply adding the gratuity to the check.

Posted by em dash at Tuesday, April 04, 2006 10:39:55

[4]
Or maybe we should get rid of tipping. Just pay people. Why leave it to tips to "supervise" employee behavior. Isn't that what supervisors are for?

I notice the look of incredible disappointment barely hidden when I do not order drinks, appetizers, etc. Right from the start we are on a bad footing, because the server is making calculations about what's in it for them. Bad ones because I am a generous tipper, but how can they know?

Tips force servers to push more food and drink on us than would otherwise be the case.

Take tips out of the calculation, and I think service might actually improve.

Posted by shirah at Tuesday, April 04, 2006 13:26:15

[5]
Excellent point about eliminating tipping. I think it's criminal that servers don't even get paid minimum wage.

Gov. Dean's email yesterday on raising the federal minimum wage is a definitely movement in the right direction >> http://www.democrats.org/pa...

Posted by em dash at Tuesday, April 04, 2006 14:42:54

[6]
And have you ever been served in New Zealand? Well, you get what you pay for. Nothing is slower than a New Zealand bartender.

Posted by exclab at Tuesday, April 04, 2006 19:09:28

[7]
And have you ever been served in New Zealand? Well, you get what you pay for. Nothing is slower than a New Zealand bartender.

Posted by exclab at Tuesday, April 04, 2006 19:09:41

[8]
In America we have the Pursuit of Happiness, not necessarily the possession there of. If you ever go to NZ, I think you can see the possession of. Beautiful.

Posted by exclab at Tuesday, April 04, 2006 19:10:44

[9]
I would love to have servers earn real wages/salaries and have those costs reflected in the price of the menu items.

Shirah, I'm glad you also made the point about servers being disappointed by customers who don't order drinks and appetizers -- I sometimes wish I could just pay for time to linger at a table, instead of ordering another drink that I don't really need.

Posted by DCvote at Tuesday, April 04, 2006 19:36:02

[10]
Never had any problems with servers in New Zealand though I didn't spend much time in bars there. What I did notice was more of a spirit of equality, which I like.

These servers were paid a much higher rate than ours here get because they depend on tips to make up the difference.

Posted by shirah at Tuesday, April 04, 2006 20:01:16

[11]
What's interesting for me is to witness the clash of cultures that takes place at the restaurant table—that of the working person trying to hustle a living in a thankless and underpaid job with the uniquely American consumer expectation of being lavished with attention at rock bottom prices.

Nevermind, the real culture clash going on in the kitchen.

Posted by em dash at Tuesday, April 04, 2006 20:46:58

[12]
All this stuff about servers needing real wages versus tips is insulting. A good waiter can make way more with tips than with wages. Having been a waiter, I can say positively that even here in Denver, where there is no food culture to speak of, it's possible to bring in $40K as a kid at Chili's; at an upscale restaurant, a good, experienced waiter may earn close to, if not, six figures.

People who don't like the idea of tipping come off as cheap and frankly, unawares to the nature of the restaurant industry. Restaurants walk the line between operation and failure; there are few that could even survive the move to a tipless system. Not that anyone in the industry would even like that.

Don't believe me? Check out Waiterrant.net. Years and years of experience, many supporting resources, all on one platter for your gustative needs.

Posted by Axman at Wednesday, April 05, 2006 08:40:25

[13]
Speaking as a former waiter (in both high end and low end establishments) and daughter of a restaurant owner, I'm the last person on Earth who would insult servers.

My brother is, in fact, a waiter at Chili's and he's not bringing home anywhere near $40K so I'm not quite sure where your figures are coming from.

The larger labor issue here is the exploitation of workers by employers who fail to fairly compensate the staff because they assume that tips are rounding out the wage. There are many factors which determine whether waiters can earn a living wage that exist far outside their own scope of influence.

Why should the wait staff's personal income be penalized by bad management. Truthfully, what other industry accepts that kind of proposition for its workers?

Try being a server in a rural area and I think you may change your mind about the benefits of trying to live off of tips.

Posted by em dash at Wednesday, April 05, 2006 11:42:44

[14]
That's true, it could be a city thing. But yeah, $40k for senior or just good waitstaff isn't uncommon (here in Denver) and that's at popular places. My dad used to run Le Picardy in Topeka (this was in the late eighties and early nineties, basically the fine restaurant; Christ, Bob Dole was a regular, but that's a different story) and the head waiter used to rib him because she often made more than he did.

But he was the sort of guy who rose up from the bottom and didn't stick it to the employees; I know that may seem rare but bad employers can't be the majority of patrons. These types are bad at more than just employing and run their shows into the ground. Companies that stay standing (all the luck to them, we're not living in Kansas anymore) need to be good businesses in every way.

I could imagine that in the sticks things don't pan out as well. But shouldn't this be a problem that stays in the sticks? Shouldn't this be something for local legislature rather than Federal or even state mending? Why should all the employees be denied a good wage to prevent unlucky ones from getting poor wage?

One thing about industries accepting bad management: Enron. WorldCom. Xcel. Hell, even agriculture. Medical research is championed by grad students. Ever see a lively grad student? There are plenty of industries that gladly accept poor worker returns over major profits. Even if we'd like to fix them all (and who wouldn't, honestly) aren't there bigger fish to fry?

Posted by Axman at Wednesday, April 05, 2006 23:48:39

[15]
That's true, it could be a city thing. But yeah, $40k for senior or just good waitstaff isn't uncommon (here in Denver) and that's at popular places. My dad used to run Le Picardy in Topeka (this was in the late eighties and early nineties, basically the fine restaurant; Christ, Bob Dole was a regular, but that's a different story) and the head waiter used to rib him because she often made more than he did.

But he was the sort of guy who rose up from the bottom and didn't stick it to the employees; I know that may seem rare but bad employers can't be the majority of patrons. These types are bad at more than just employing and run their shows into the ground. Companies that stay standing (all the luck to them, we're not living in Kansas anymore) need to be good businesses in every way.

I could imagine that in the sticks things don't pan out as well. But shouldn't this be a problem that stays in the sticks? Shouldn't this be something for local legislature rather than Federal or even state mending? Why should all the employees be denied a good wage to prevent unlucky ones from getting poor wage?

One thing about industries accepting bad management: Enron. WorldCom. Xcel. Hell, even agriculture. Medical research is championed by grad students. Ever see a lively grad student? There are plenty of industries that gladly accept poor worker returns over major profits. Even if we'd like to fix them all (and who wouldn't, honestly) aren't there bigger fish to fry?

Posted by Axman at Thursday, April 06, 2006 09:21:32

[16]
That's true, it could be a city thing. But yeah, $40k for senior or just good waitstaff isn't uncommon (here in Denver) and that's at popular places. My dad used to run Le Picardy in Topeka (this was in the late eighties and early nineties, basically the fine restaurant; Christ, Bob Dole was a regular, but that's a different story) and the head waiter used to rib him because she often made more than he did.

But he was the sort of guy who rose up from the bottom and didn't stick it to the employees; I know that may seem rare but bad employers can't be the majority of patrons. These types are bad at more than just employing and run their shows into the ground. Companies that stay standing (all the luck to them, we're not living in Kansas anymore) need to be good businesses in every way.

I could imagine that in the sticks things don't pan out as well. But shouldn't this be a problem that stays in the sticks? Shouldn't this be something for local legislature rather than Federal or even state mending? Why should all the employees be denied a good wage to prevent unlucky ones from getting poor wage?

One thing about industries accepting bad management: Enron. WorldCom. Xcel. Hell, even agriculture. Medical research is championed by grad students. Ever see a lively grad student? There are plenty of industries that gladly accept poor worker returns over major profits. Even if we'd like to fix them all (and who wouldn't, honestly) aren't there bigger fish to fry?

Posted by Axman at Thursday, April 06, 2006 09:22:05

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