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?


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