UnderCover Waitress: Who Pays the Tax, Anyway?

Tuesday, January 22, 2013

Who Pays the Tax, Anyway?

Ask the Waitress!

These important issues keep popping up. Excerpts from two recent additions to my inbox are as follows: 
Hi, I'm a server, and we pay 3 percent of our total sales into a tip share that pays the bartenders and host/bussers. Last night my total sales were around 1000.00 and I had to pay 30 dollars in tip share. At the end of the night when they ask what I'm claiming as tips, do I have to claim that 3 percent I pay out to bartenders and hosts/bussers? 
Hi Undercover Waitress! I've recently gotten my first job as a waitress. My boss collects 20% of my tips each day in a tip pool in order to pay the bussers and the hostess. I have no problem with this. However, my boss collects that 20% everyday, and the bussers and hostess only work on the weekends. That means on days during which I am bussing, hosting, and serving, I am still tipping out the weekend employees. I feel like this is not right, and I have told my boss my concerns but my concerns were dismissed. I do not think she is doing it to be malicious, but I feel like it is my money and I shouldn't have to give it up. Do my complaints have any grounds? I need to understand where I stand legally on this issue before I am willing to fight for my rights. 
Fasten your seat belts, here we go:

Income: According to the Online Merriam-Webster, income is "a gain or recurrent benefit usually measured in money that derives from capital or labor; also : the amount of such gain received in a period of time ." 

That doesn't tell us much; however, your tip income is the money you get to keep. And, yes, you claim your income for tax purposes.

Restaurant owners and manager require servers to give a portion of their tips to other employees. It is built into everybody's compensation package; in other words, the owner gets to pay the hostess less and make up for it with waitress tips.

So, let's say I work a shift and make $100. I pay $10 to the busser, $5 to the hostess and $5 to the bartender. That leaves me with $80 in tip income for the shift. I claim $80. The busser claims $10 in tip income. The hostess claims $5, and the bartender claims $5.

If the busser lies and does not claim his income, this is not the server's problem. I actually worked in a restaurant whose POS system was set up so servers would tell the computer how much money they gave to other employees. For this, the restaurant deserves a gold star. Most establishments, in my experience, have the sloppiest bookkeeping when it comes to tips imaginable. This is just one reason why I recommend servers keep a small notebook of their tips and tip outs.

In general, claim your income. Do not claim the income that others get to take home.

The second question above is a bit stickier. Many food servers recognize that a tip out is a way of thanking other front of house staff for helping keep customers happy and turning tables. Human nature being what it is, a busser working for strait hourly pay will not work as hard as a busser who knows if he gets the tables turned quickly, the waitress will make more money, which means he will also make more money. Incentive works wonders.

However, in the second scenario above, the waitress is paying twenty percent of her tips into a tip pool to pay employees who are not working. This completely defeats the incentive arrangement, while allows the owner to pay the bussers and hostess less, thereby keeping more profit for himself. This is a good example of the rich getting rich on the backs of the poor.

The United States Department of Labor spells out the rules for tip income and tip pooling.
Tip Pooling: As noted above, the requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips. The FLSA does not impose a maximum contribution amount or percentage on valid mandatory tip pools. The employer, however, must notify tipped employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each tipped employee ultimately receives, and may not retain any of the employees' tips for any other purpose. [Emphasis mine.]
It sounds unfair, but at this point in time I do not think it is illegal. However, as I'm just a stupid waitress, a lawyer in your state may be able to tell you otherwise. ;-)

Thanks for asking the waitress!



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