About Tips

A Few Tips About TIPS

"Without tips, I feel the motivator is gone. I work for money. However, if there would be another form of incentives to create sales, like a percentage of the sales from my employer, I probably could do without tips." Tips are made up of the sums voluntarily paid by patrons or service charges added to the patron’s bill, but do not include administration fees added to this bill. An employer cannot require that an employee pay credit card costs. Whatever form tips take, they cannot become part of the wages. Consequently, the employer must pay the employee at least the minimum wage prescribed without taking into account the tips that he/she receives.

An employee receiving tips is an employee who usually receives tips and who works: 1. in an establishment that offers lodging to tourists in return for payment, including a campground; 2. in a place where alcoholic beverages are sold for consumption on the premises; 3. for an enter prise that sells, delivers or serves meals to be eaten off the premises; or 4. in a restaurant, except if it is a place where the main activity consists in the providing of food services to customers who order or choose the items at a service counter and who pay before eating.

The tip may be paid directly or indirectly to employees. It is paid directly by the patron to the employee, when it is given from hand to hand. Tips are paid indirectly when the employer collects tips on behalf of the employee under either of the following circumstances: 1. the patron uses his credit card or debit card; 2. the patron pays the employer service charges added to the bill. Whether tips are paid directly or indirectly, they belong to the employee who rendered the service. If the employer collects the tips, he must give them in their entirety to the employee who rendered the service.

The employer cannot impose the sharing of tips among employees. Nor can he intervene in any way whatsoever in the establishment of a tip-sharing arrangement. Only those employees entitled to tips may agree to distribute among themselves the tips that belong to them or to distribute a portion thereof to other employees in the establishment. However, an employee who benefits from a redistribution of tips does no t become, by reason of this fact, an employee having to be paid at the minimum wage rate applicable to employees receiving tips.

Tips? Why does one have to tip a waiter? What would happen if all employers paid their wait staff a "competitive wage?" The first question is: Wages compared to what? What standards should one use for a waiter’s salary? Into which category does a waiter fit? Should they pay waiters the same as housewives? Or should waiters be better paid with a biweekly paycheck, maybe like like a bank teller? Or maybe waiters should have a monthly salary similar to a grocery store assistant manager? I don’t know! Yet I have experienced in several places, traveling Europe, wait persons who could not care less about what I ordered and if I ordered anything at all. I did not understand this attitude until I found out that the tip was included and the staff was on a salary. I like my job. I know if the employer would pay me a mediocre wage and no tips, I would look fast for another income. For me those tips are not a guaranteed income, they are an incentive and have to be earned. Tips fluctuate greatly. Some days I work a whole shift and my pockets are empty, the reason: little or no business. On other nights I work a few hours but make a week’s wages in a relatively short time. Any which way, my experience is that there is no income which doesn’t get taxed including my tips. Therefore I report them on form 4070 at the end of each pay period, in my case, at the time that’s twice a month. Reported tips, done on form 4070 at the time (1996) in the United States, should equal eight percent of the waiter’s sales or better, not less. This way one avoids the problem of allocated taxable income which is done by the employer to hold employees responsible for their taxes at the end of the calendar year. These allocations can add up to a big chunk of money owed to the government. The result can be a more or less friendly reminder from the IRS asking to pay up or else. Back-taxes are due and payable at the time of the income tax report. That is usually when the pockets are still empty from the slow winter business and the yearly overspending around Christmas. I know ho w it feels to pay taxes for the previous year. Therefor if I can avoid getting into debt with the IRS I try to, wherever possible, pay my taxes as I go instead of afterwards. (IRS) Internal Revenue Service, the federal tax collection authority in the U.S.A)