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Saturday, November 22, 2014

Don't Lie to Balance The Books

Ask the Waitress!
Hi, i work at a pizza restaurant as a server and my state pays 3.10 minimum for servers and 5.05 is the "tip credit" we have to claim. For example, tonight I made $14 after 8 hours at work but they still require me to claim $40.40 knowing I did not make that amount. Reasoning is its the beginning of the week and it will balance out at the end. I feel that this is unfair. Can you please give me some insight on this. 
Yes, I will try to offer some insight.

Tip Credit

First, a "tip credit" is not something you claim. You claim income, and only if you earn it.

A tip credit is the amount of money the restaurant saves as long as you earn enough in tips to cover minimum wage:

$3.10 + $5.05 = $8.15. This tells me that the minimum wage in your area is $8.15. Your employer is paying you a tipped minimum wage of $3.10. As long as you make at least $5.05 in tips per hour, you are making minimum wage. If you make less, your employer owes you money.

Claiming Wages

It is illegal for an employer to require you to claim money you didn't make. Period. If they are paying you the tip credit on a weekly basis, they don't need you to lie at the beginning of the week.

For example:

You work 8 hours on Tuesday. Tips are bad, and you earn less than $8.15 per hour. You claim the $15 in tips you made.

If your employer is correct, that it will balance out by the end of the week, then Friday should look like this:

You work 8 hours. You make $200 in tips.
$200 +  $15 = $215.
$215 \ 16 hours = $13. 44.
It did balance out; your employer does not owe you any tip credit.

For this scenario to work, you did not have to lie and claim money you didn't earn on Tuesday. Let's look at another scenario:

You work 8 hours on Tuesday. Tips are bad, and you earn less than $8.15 per hour. You claim the $15 in tips you made.

You work 8 hours on Friday. Tips are bad again, and you only earn about $30. 
$30 + $15 = $45. 
$45 \ 16 hours worked this week = $2.82.
Your employer owes you part of the tip credit. 
$5.05 - $2.82 = $2.23. 
16 hours x $2.23 = $35.68. 

In this scenario, your employer owes you $35.68 for the week. This is in addition to the $3.10 per hour he is already paying you. 

You should never be required to lie to the IRS about the amount of money you made. If your employer tries to say, "This is just for our bookkeeping records" then he needs to be audited, because his records should be accurate. The IRS would agree with me on this point. 

In my opinion, for all it's worth, you are being mistreated and stolen from. Remember, I'm not a lawyer, just a stupid waitress. ;-D 

Best of luck to you, 

Sunday, November 16, 2014

Tell Your Story!

I made a new contact recently. She is currently waitressing and collecting stories and experiences about what it is like to work in the restaurant industry. She would like to include anonymous quotes and stories from those of us who toil in food service. And she wants to hear from you!

As I do on this blog when people write to Ask the Waitress!, this lady will keep your personal information confidential and anonymous. When you write to her to share your experiences, she will need you to give her some information upfront so she knows you are real, but it will never be published or shared.

Please write to Jess Miller at jess@debt.com if you would like to share your experiences with what it is like to work in restuarants.

* Have you been promised monies or benefits that you never received?
* Is the tip sharing arrangement in your restaurant fair and legal?
* Can you get time off when you need it?
* Have you ever been harassed?

And anything else you think is pertinent.

Best to all!

Sunday, September 7, 2014

Paying Tax On Somebody Else's Tips

Ask the Waitress!

This is from the state of Virginia:
My wife is a waitress in family restaurant in VA. The manager gets paid a salary and also considers herself a waitress. She makes them split tips. I don't think this is fair because she gets paid a salary; which is a lot more than waitresses. Is this legal? 
Now the manager wants them to split tips but have to pay taxes on what it was before split. Is this legal? Ex. Friday night my wife's sales were $600 and the other two were around $250 (including so called manager). Before split my wife had over $120 in tips,  after split she had $75. Doesn't seem fair. 
Now the manager wants them to claim cash tips too besides credit/debit card. I know IRS wants 100%. My wife was claiming her credit/debit transactions and adding to it with her cash to get 15%. Can they make her claim what they want? Last week her pay check stub said she grossed over $300 and $235 in tips; she made $100 less. Something is going on here not sure what she should do. Advice would be greatly appreciated.
You bring up more than one problem; let's tackle them one at a time.

Virginia Tip Laws and Managers

Unfortunately, it looks like Viriginia is one of the states that does allow managers to take a chunk of waitress tips. At the Nolo Press web page about Virginia tip pools, it states:
According to the federal Department of Labor, only employees who regularly receive tips can be part of the pool. Employees must receive notice of the tip pool, as explained above. Employees can't be required to share their tips with employees who don't usually receive their own tips, like dishwashers or cooks. And no employers are allowed in the pool: Tips from a tip pool can't go to the employer or, in some states, managers or supervisors.
If the manager is waiting tables, she can say she is an employee who regularly receives tips. Plus, in Virginia if she is a manager but not the owner/employer then she can legally require you to include her in a valid tip pool. 

This is where what the manager can get away with stops. 

Claiming Tips and Tax Fraud

You are correct when you state the Internal Revenue Service (IRS) requires waitresses to claim all of their tips, both those given on credit/debit cards as well as cash tips. One hundred percent of your wife's tips are the tips she brings home as her pay. Nobody, NOBODY has to pay taxes on somebody else's take home pay. 

If your wife makes $200, but has to pay the manager/waitress, for example, $50 of those tips, then your wife is supposed to pay taxes on $150. Not a penny more or less. 

If this manager is requiring waitresse to give her their tips but pay taxes on the full amount ($200 in the above example) this is called "Tax Fraud." I recommend your wife contact the IRS. The IRS may be very interested in conducting an audit of this restaurant and this manager. How Do You Report Suspected Tax Fraud Activity?  on the IRS's website gives you the information you need. I suspect you will fill out form 3949-A, but you may call the toll-free number for any clarification you may need. 

Good luck.