3 ms·

At many locations you’re just subsidizing business costs. The employees aren’t netting enough tips to break above actual minimum wage, so you’re literally donat

At many locations you’re just subsidizing business costs. The employees aren’t netting enough tips to break above actual minimum wage, so you’re literally donating to the business not the person you think you’re tipping.

throwawaysleep 2y ago
Where I live, employees don't even keep the tips by law. Owner can pocket them.
- SoftTalker 2y ago
  Another reason to tip in cash.
robocat 2y ago
You are marginally improving their wage: tipping an extra $1 makes them $1 better off. Your point is really about minimum wage standards not "subsidization". The rule of thumb for restaurant business costs in non-tipping-culture NZ is: 1/3 staff costs, 1/3 food costs, 1/3 everything else.
- MarkSweep 2y ago
  Not necessarily. In many US states, tips count for a portion of the minimum wage. So if you tip a minimum wage employee but the tip does not cause them to go above the minimum wage, you have only reduced the amount the employer is required to pay. Once the employee receives $5.12 in tips in an hour, they will get each incremental dollar of tips. https://www.dol.gov/agencies/whd/state/minimum-wage/tipped https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
- danaris 2y ago
  (Note: I know this applies to most US states; other places YMMV) Not if they're not making it up to the regular minimum wage with tips. The federal minimum wage is $7.25/hr. The federal tipped minimum wage is $2.13/hr. If a tipped employee doesn't get enough tips to reach $7.25/hr for a particular pay period, the employer has to make up the difference. So with low tips, all you're doing is subsidizing the employer.
washadjeffmad 2y ago
>The employees aren’t netting enough tips to break above actual minimum wage If true, illegal. A business can pay a lower nominal wage if tips are expected to supplement it above the minimum (which employees are expected to report and pay taxes on), and if they earn below it, they're adjusted to the minimum.
- Frost1x 2y ago
  No, that’s the law. Employers in many service industries enjoy relaxed rates below minimum wage. The law is that if during their standard pay period, their net wage (paying below minimum for hour worked) + their total tips don’t equate to what they would have earned making federal minimum wage for the time they worked, the employer has to pickup the slack to assure they are paid at least minimum wage. If the total sum of tips plus their lower pay rate exceeds what they would have otherwise earned making actual minimum wage rates, then the employer doesn’t have to pay any additional wages because tips picked up the slack. Also the employee is rewarded by making rates above the minimum. In the first case, the employee getting tipped some but not enough to make minimum wage will ultimately only get minimum wage rates for their work. Your tips just close the gap a bit for the employer who would have to pay less to make sure the employee made minimum wage. So, subsidizing the employer/business. As someone else suggested, tipping in cash is my preferred way because it allows the employee to pocket the tip without reporting, assuring the tip actually goes to them. Overall in most cases tips should be a non-existent practice or at the very least, not nearly as frequent as it currently is. I regularly dine at several restaurants that have now included tips in their menu and service costs that assure employees are paid a fair rate. The menu prices are slightly higher but I prefer this practice because I know everyone is treated reasonably. If service staff go out of their way and above and beyond, I’ll throw in extra, which is what tipping should be, at least in my opinion.
  - washadjeffmad 2y ago
    Taxes are paid on tipped income by the employer and employee. It's not a subsidy as much as it's independent contracting plus a (nominal) supplemental base wage. There's more to the dynamic, but that's the gist. I have a feeling we're saying the same thing, so here's the word from the source: https://www.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting#:~:text=An%20employer%20who%20operates%20a,employees%20reported%20to%20the%20employer https://www.irs.gov/businesses/small-businesses-self-employe....

throwawaysleep 2y ago

Where I live, employees don't even keep the tips by law. Owner can pocket them.

SoftTalker 2y ago
Another reason to tip in cash.

robocat 2y ago

You are marginally improving their wage: tipping an extra $1 makes them $1 better off. Your point is really about minimum wage standards not "subsidization". The rule of thumb for restaurant business costs in non-tipping-culture NZ is: 1/3 staff costs, 1/3 food costs, 1/3 everything else.

MarkSweep 2y ago
Not necessarily. In many US states, tips count for a portion of the minimum wage. So if you tip a minimum wage employee but the tip does not cause them to go above the minimum wage, you have only reduced the amount the employer is required to pay. Once the employee receives $5.12 in tips in an hour, they will get each incremental dollar of tips. https://www.dol.gov/agencies/whd/state/minimum-wage/tipped https://www.dol.gov/agencies/whd/state/minimum-wage/tipped
danaris 2y ago
(Note: I know this applies to most US states; other places YMMV) Not if they're not making it up to the regular minimum wage with tips. The federal minimum wage is $7.25/hr. The federal tipped minimum wage is $2.13/hr. If a tipped employee doesn't get enough tips to reach $7.25/hr for a particular pay period, the employer has to make up the difference. So with low tips, all you're doing is subsidizing the employer.

washadjeffmad 2y ago

>The employees aren’t netting enough tips to break above actual minimum wage If true, illegal. A business can pay a lower nominal wage if tips are expected to supplement it above the minimum (which employees are expected to report and pay taxes on), and if they earn below it, they're adjusted to the minimum.

Frost1x 2y ago
No, that’s the law. Employers in many service industries enjoy relaxed rates below minimum wage. The law is that if during their standard pay period, their net wage (paying below minimum for hour worked) + their total tips don’t equate to what they would have earned making federal minimum wage for the time they worked, the employer has to pickup the slack to assure they are paid at least minimum wage. If the total sum of tips plus their lower pay rate exceeds what they would have otherwise earned making actual minimum wage rates, then the employer doesn’t have to pay any additional wages because tips picked up the slack. Also the employee is rewarded by making rates above the minimum. In the first case, the employee getting tipped some but not enough to make minimum wage will ultimately only get minimum wage rates for their work. Your tips just close the gap a bit for the employer who would have to pay less to make sure the employee made minimum wage. So, subsidizing the employer/business. As someone else suggested, tipping in cash is my preferred way because it allows the employee to pocket the tip without reporting, assuring the tip actually goes to them. Overall in most cases tips should be a non-existent practice or at the very least, not nearly as frequent as it currently is. I regularly dine at several restaurants that have now included tips in their menu and service costs that assure employees are paid a fair rate. The menu prices are slightly higher but I prefer this practice because I know everyone is treated reasonably. If service staff go out of their way and above and beyond, I’ll throw in extra, which is what tipping should be, at least in my opinion.
- washadjeffmad 2y ago
  Taxes are paid on tipped income by the employer and employee. It's not a subsidy as much as it's independent contracting plus a (nominal) supplemental base wage. There's more to the dynamic, but that's the gist. I have a feeling we're saying the same thing, so here's the word from the source: https://www.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting#:~:text=An%20employer%20who%20operates%20a,employees%20reported%20to%20the%20employer https://www.irs.gov/businesses/small-businesses-self-employe....