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Waitress holding salads.
She may smile for her tip, but that doesn't mean her pay is anything to be happy about.
The basic facts of the tipped worker minimum wage are appalling:
  • It's $2.13 an hour, and has been since 1991, because whenever the minimum wage is raised, the restaurant industry launches a massive lobbying effort to keep tipped workers from being included.
  • The median wage for tipped workers is $8 an hour, and one in five lives in poverty.
  • While restaurants are supposed to make up the difference when workers' tips don't raise them to the full minimum wage of $7.25, they often don't.

What the absurdly low tipped worker minimum wage combined with restaurants not following the law by bringing workers up to minimum wage when their tips fall short means is this:

Like millions of Americans across the United States, 23-year-old Anna Hovland worked a waitressing job earlier this year to make ends meet. Her restaurant in Washington, DC, paid her the local minimum wage for tipped workers, $2.77 an hour, which meant that after taxes, her paycheck was usually zero. Her tips, never dependable, ranged from $20 to $200 a shift. "In a city as expensive as DC, I've been able to make ends meet by the skin of my teeth," Hovland says. "Sometimes it will only be in the last week or two of a month that I'll realize I've made enough to pay all my bills." [...]

Hovland tells Mother Jones that before she got in touch with the Restaurant Opportunities Center last fall—to find out why she was getting zero-dollar paychecks—she had no idea that her employer was supposed to make up the difference in tips. "We never logged our tips or reported them to our employers," she says, unless they were on credit cards. She adds, "Even after I shared information about the minimum wage difference with coworkers, nobody felt comfortable asking employers about it."

Forcing workers to ask to be paid the minimum wage is a recipe for wage theft. Any worker who asks has to know that they're putting a target on their back and any halfway savvy employer knows that, while they can't admit they're firing a worker for asking to be paid minimum wage, it won't be hard to find an excuse to fire the worker for something else.

A few states have the same minimum wage for all workers, and recently, Hawaii included tipped workers when it raised its minimum wage to $10.10. So clearly a tipped minimum wage above $2.13 doesn't spell doom for the restaurant industry, contrary to the industry's lobbying efforts. Whereas the current state of affairs genuinely does spell poverty for an unacceptable number of workers.

Originally posted to Daily Kos Labor on Mon May 12, 2014 at 08:36 AM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  My son is a bartender in the Philly area (17+ / 0-)

    My wife and I went down to visit him over Easter weekend and I saw a bunch of pay checks sitting on a table. When I asked why he hadn't deposited them he said look at the amount. $0.00

    Frankly, I’m getting more than a little tired of hearing from angry America. I’m also less than fond of knee-jerk America. And when you combine the two with the Internet, you too often get stupid America, which is really annoying.

    by jsfox on Mon May 12, 2014 at 08:40:40 AM PDT

  •  My wife and I (18+ / 0-)

    Decided about a year ago that we were going to tip at least minimum wage of $7.25 for all our tips, more if the check is larger.  But given our average eating out check is about $25.00 our tip is often $7.25.

    Servers deserve a higher wage, the job is not easy and usually doesn't tip all that well either. It's only a couple extra bucks but if I am going to support a minimum wage increase the least I can do is ensure the people who work for me, no matter how little time it is make at least the minimum wage while they do it.

  •  Why would anyone continue to work for $0.00 (3+ / 0-)
    Recommended by:
    commonmass, Johnny Q, ER Doc

    It just doesn't make much sense.

    Stockholm syndrome, maybe?

    •  Of course, they're not working for $0.00 (6+ / 0-)

      They're working for tips, which are some amount above zero.

      •  Her tips vary between $20 and $200 per shift. (3+ / 0-)
        Recommended by:
        jfinsocal, catwho, AlexDrew

        Assuming an eight-hour shift, which is extremely rare in the restaurant industry, she makes up to $25 per hour. She also states that she does not log or report tips.  This means she is not paying proper taxes on her earnings.

        Since her shift is more likely 4-6 hours, she is making up to $50 per hour, and she thinks it is largely tax free.  Her employer probably makes her report, or automatically reports for her, 8% of her gross sales, so she is paying some taxes, but they eat up her paycheck.

        I assume she has far more shifts in the $200 range than the $20 range, or she would not be able to pay her bills.  Still, $25-50 per hour sounds good, but if you're talking 4-6 hour shifts, you're not working full-time, and not knowing if you're going to have a good tip day can make budgeting a hassle.

        Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

        by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 11:51:19 AM PDT

        [ Parent ]

        •  Nobody wants to hear this, anymore than (1+ / 0-)
          Recommended by:
          AlexDrew

          they want to hear about BMW-driving waiters lounging around the pool until 5PM.

          Their real God is money-- Jesus just drives the armored car, and his hat is made in China. © 2009 All Rights Reserved

          by oblomov on Mon May 12, 2014 at 12:08:53 PM PDT

          [ Parent ]

          •  I don't get your point. (2+ / 0-)
            Recommended by:
            cowdab, AlexDrew

            Are you saying my facts are equivalent to some mythical fat cat server?

            Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

            by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 12:16:37 PM PDT

            [ Parent ]

            •  No, your hypothetical description of the situation (2+ / 0-)

              leaves open the possibility that there are waiters who are not slaves, and who actually make decent money.  This is contra to the propaganda point of the diary, hence my assertion that nobody wants to hear it, any more than they wanted to answer my question about the poverty rate of the general population (which is one in six according to Bureau of the Senseless), or hear about BMW-driving waiters lounging around the pool until 5PM.

              I think we're more on the same page than opposed,

              Their real God is money-- Jesus just drives the armored car, and his hat is made in China. © 2009 All Rights Reserved

              by oblomov on Tue May 13, 2014 at 09:51:40 AM PDT

              [ Parent ]

        •  That's why I use credit cards to pay for tips (3+ / 0-)

          I usually tip 20%, but I make sure that I do it on a credit card so there's a record for taxes.  I guess it's up to the restaurant/bar management to make sure the tips get reported to the IRS but there's a belief amongst some tipped employees that they play by different rules regarding reportable income. Why should the cook have to pay taxes on their full income but not the server?

          •  We have one local chain where (0+ / 0-)

            we will pay the check with a credit card, but leave the tip in cash.  This chain has started deducting credit card fees from the servers' tips.    

            I get your concern about the cook, but it bothers me little to help some lower wage folk have the opportunity to choose to pay the same tax rate as the banksters, should they do so.  

          •  And I always tip cash for just the opposite (1+ / 0-)
            Recommended by:
            Hayate Yagami

            reason.  I have no interest in going up the ass of a hard working minimum wage employee to assure that they pay every penny they owe.  I figure lots of us pay more than we owe and then some.   BTW, darn nice tip.  Thanks for that.

          •  Because the cook... (0+ / 0-)

            Makes an actually hourly wage, a server does not. Add this to the fact that most establishments require servers to "tip-out" or share a percentage of tips with the kitchen staff. It is actually very nice of you to leave 20%, so if you fee better about leaving it on a credit card, by all means do that. But it isn't just as simple as the cook pays taxes and the servers don't. The cook is guaranteed a wage and paycheck plus he is subsidized by the servers tips. If you went to work for 8 hours and make $100 would you claim it all after your "tip out " the rest of the house leaving you with $75? Knowing that if you report it all, you keep even less? I wouldn't. Why doesn't the cook have to pay the server to get his food to the table?  Honestly, it comes down to why has the restraunt industry been allowed to force customers to subsidize all their labor and artificially depress prices? Just pay servers a wage and all this goes away.

            •  Tipping out the cooks is illegal under (0+ / 0-)

              federal law.  A valid tip pool can only include employees who normally receive tips.  An employer who violates this policy loses the right to use the tip credit, meaning they have to pay the full minimum wage, or $7.25/hour.  Again, a few high profile class actions by the Department of Labor would put an end to this repugnant practice.

              Also, the 100% of tips an employee must report includes only the amount taken home after contributing to a valid tip pool.  If I make $80 in tips and tip out the bartender $15, I am required to report $65 in tips earned, not $80.

              Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

              by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 09:31:13 PM PDT

              [ Parent ]

            •  tips are shared with bussers not cooks (0+ / 0-)

              the cooks in a lot of places, esp the chains, take home less than the wait staff.

        •  You may assume too much that she is making more (1+ / 0-)
          Recommended by:
          Fiddler On A Hot Tin Roof

          in the $200 range.  There are times when a large table, 8 to 12 maybe, will take up half your shift of the usual four to five hours and then stiff (no tip) them or give them a token.  Not all restaurants add a gratuity to the tab for a large group.  I'm sure there are those who work in a store that is more exclusive and make good money.  Most are not like that.  I hope hers is.  
          When a server isn't working during busy times they are still there with few customers and that stingy wage.  They are filling condiments, folding napkins, cleaning server areas etc.  All for a lousy $2.13/hr.

      •  Sure, that may be, but goes against (2+ / 0-)

        the received wisdom at this site.

        Shhhhh!!!!

      •  Perhaps a bit more clarification. (2+ / 0-)

        Her paycheck is $0 because her tip. Assuming she has her tax automatically withheld from her paycheck. On the lowest tax bracket, 10%, it means that if she makes more then $27.70 of tip per hour on average, the resulting tax is more than $2.77 This will zero out her paycheck.

        •  Your calculations, while generally sound, (0+ / 0-)

          Do not take into account state income taxes and the number of dependents claimed on the W-4 and other tax variables.

          I am not sure if you are including FISA and other payroll taxes when you talk about the minimum rate of 10%.  Your point is valid that a paycheck of $0 means that sufficient tips were claimed for the combined taxes on the wages and tips ate up the paycheck.

          Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

          by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 01:04:50 PM PDT

          [ Parent ]

          •  Zero on the paycheck means nothing except she made (1+ / 0-)
            Recommended by:
            AlexDrew

            'at least' that much in tips for that amount to stay withheld.  She still is supposed to count up her cash and add it to any amount tipped by credit card and then file a tax return.  It is more complicated than it sounds.  Then I would imagine, with the blanket deduction, she would not get to deduct the portion of her tips that is collected for kitchen help and bartenders.  Mind you, I'm just imagining with a little inside information how it probably works.  

        •  Well OK, if that's the case (0+ / 0-)

          perhaps just a little of the atrocity implied in this diary fades away - insofar as someone maknig $27.70 per hour isn't * that * bad off.

    •  Isn't working for nothing called "slavery"? (2+ / 0-)
      Recommended by:
      Roadbed Guy, cowdab

      I suppose the next step is to make the people they're not paying actually pay for the privilege of working there.

      You may think that. I couldn't possibly comment.-- Francis Urqhart

      by Johnny Q on Mon May 12, 2014 at 12:17:44 PM PDT

      [ Parent ]

      •  From reading DailyKos I honestly (3+ / 0-)

        don't know if restaurant workers are complete idiots who work for nothing, or if it's some type of scam where they are in cahoots with their bosses to scam honest tax paying Americans like myself (as far as you know know!!).

        Anecdotally, I sometimes come down on the latter side, sometimes.

        Overall, I'd be delighted if the entire system crashed and burned and we'd become more like Macaw or New Zealand where the customer was charged upfront in a straightforward manner.

        you know, like they do at McDonalds in this country  ... .

        •  Restaurant workers are no different than (4+ / 0-)
          Recommended by:
          JVolvo, Roadbed Guy, SMWalt, bluenick

          the rest of us.  They get a job, they fill out the paperwork, and they believe the employer knows and follows the law.

          The IRS tells employers that tipped workers must report 100% of tips, but if they don't report at least 8% of gross sales as tips, the employer must report that fact to the IRS. The employer says to himself, "I'm not going to go through that IRS bullshit.  I'll just tell employees that they have to report 8% of sales as tips and be done with it."

          This has become so ingrained in the industry that almost everyone believes it to be true.  Servers often do not know they are required to report 100% of tips.  Their employer told them it's 8% of sales.  Moreover, if they move from job to job, every employer tells them it's 8% of sales.

          Employers have an incentive to foster this belief, because they pay matching payroll taxes on tips.  If a server makes $100 in a shift, but reports $20, the employer pays taxes on $20 instead of taxes on $100.  Multiply this by all servers on all shifts and it adds up.

            If the server lives long enough to collect social security, benefits are based on the reported income instead of the actual income, so the employee is ultimately screwed.  But the server was also paying lower payroll taxes, too.

          Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

          by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 12:53:21 PM PDT

          [ Parent ]

        •  Thanks for the grumpy white guy POV. How's (1+ / 0-)
          Recommended by:
          cowdab

          Fox Business Channel?

          The Third Way ain't My Way!

          by JVolvo on Mon May 12, 2014 at 01:49:23 PM PDT

          [ Parent ]

          •  You are very welcome (1+ / 0-)
            Recommended by:
            Sparhawk

            I'm just curious, if somebody is cheating on their taxes, forcing you to pay a higher amount, you're OK with that?

            I"m not saying that that is necessarily the way things are, but the system seems to totally encourage that either from the POV of the employer OR the employee.    

            •  Spoken like a true upper-bracket guy. Do you (0+ / 0-)

              know care about anyone in your life who is a restaurant server?  I'm guessing not.  Or, if by chance you do, do you lecture them about their tax filing status?

              Do you think most folks choose serving over more stable/less demanding jobs or are they doing the best they can?

              Re your Q: I'm much more concerned with our bullshit tax-reduction games for the wealthy and the corporations than all the little folks making less than $25K per year.

              And I don't watch Fox Business.  Funny, that.

              The Third Way ain't My Way!

              by JVolvo on Mon May 12, 2014 at 04:24:50 PM PDT

              [ Parent ]

        •  You are so very correct. Let them pay their own (0+ / 0-)

          help and charge  the customer accordingly. I am tired of trying to make up for the stingy penny pinchers who don't pay their share.  It may not be fun but it's the system we have.  
          They are not stupid, the servers.  They are moms, students, and a lot  of other things whose education and families find the hours best for them or just plain have to work for some money even to eat and stay dry.

      •  It's not exactly working for nothing. (0+ / 0-)

        Judging from the story, it seem that the $0 paycheck is the result of income tax.
        Basically, she made enough such that her tax exceed $2.77, which is taken from her paycheck (thus dropping it to zero).
        My assumption is that the tips she received is separated from the paycheck.

      •  She's not working for nothing (0+ / 0-)

        The reason the paycheck gets zeroed out is that there are taxes and FICA on reported tips -- so the hourly pay, which isn't very much, goes to cover those taxes.

        Example: Let's say it's a high end restaurant on a busy night, and she gets $100 in tips, all on credit cards, but only $10 in hourly pay. The FICA/Medicaid on that $100 of tips is 7.65, and there may be state/federal income tax withheld on top of it. So the hourly paycheck disappears to cover the taxes.

        If you are a construction worker and you earn $110 for a day's work, you will only take home say $100 after taxes, the same as the server did.

    •  The restaurant considers the hourly wage about (0+ / 0-)

      what the server will owe on taxes on his/her tips.  My granddaughter worked for a national chain. I won't mention the name but to say it is named for an animal who has a red breast, flies and gets some of the first worms of spring.  

      At the end of her shift, besides the low hourly wage, she was forced to fork over a percentage of her tips as well.  They went to the kitchen help and the bartenders.  They made more hourly and the bar tenders got tips as well.  She finally changed jobs after figuring out that by the time she gave them a % of her tips, she was making much less than minimum wage.  
      On top of that, if she could not work a shift, she was expected to find her own replacement even though she had a manager. We always tipped well; but after watching someone try to make ends meet with a serving job we tip even better.

      •  If she worked there less than three years ago, (0+ / 0-)

        she can still file a complaint with the Wage and Hour Division of the Department of Labor.  It is illegal to require a tipped employee to share tips with non-tipped employees such as kitchen help.  The penalty is that the employer must pay the full minimum wage.  

        Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

        by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 09:37:56 PM PDT

        [ Parent ]

        •  Yes, and then she can get fired (if she is (0+ / 0-)

          still working in any kind of job like that) and blacklisted so she will never work as any kind of server ever again.  She could also end up getting sued and defending yourself from even a completely baseless lawsuit can take over a decade and over a million dollars depending on how long the company can drag it out.

          You have watched Faux News, now lose 2d10 SAN.

          by Throw The Bums Out on Thu May 15, 2014 at 05:36:20 PM PDT

          [ Parent ]

      •  Also, if she made less than minimum wage (0+ / 0-)

        after the tip-out, the employer is required to make up the difference.

        Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

        by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 09:39:22 PM PDT

        [ Parent ]

    •  because on weekends they make as much as (0+ / 0-)

      they do all week.  tax free too.  I mean do you think everyone who gets cash tips declares that on their taxes in April?

  •  And they are piling on the work ... (16+ / 0-)

    A lot of people think, "Okay, they wait tables and get paid for that", but it's often much more than that including "side work" which can involve any and all sorts of general restaurant maintenance from polishing silverware, to mixing salad dressing (and numerous other kitchen prep duties) to mopping floors, stacking chairs, cleaning restrooms, etc. Positions that used to involve other full time staff.

    More restaurants these days also forgo the "busboy", in lieu of waitstaff clearing, cleaning, and setting the tables themselves, no matter how busy they are. Or mix and serve your own drinks where there is no bartender.

    And understandably, the "service" suffers.

    Add to that, some having to "pool" tips with other staff every night, supplementing low wages across the board.

    We're not talking $200 a night gigs either, those types of eateries are usually fully staffed, it's the corporate chains.

    The $0 checks are pretty common, it's solely a cash gig whereas most nights credit card tips as well are withheld to cover taxes - taxes which are calculated and due based on "sales", not real income. Stiffed or not, you have to pay.

    “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

    by RUNDOWN on Mon May 12, 2014 at 09:03:20 AM PDT

    •  FSLA (6+ / 0-)

      You make good points, but it's also sad how few know their rights under federal law.  Such "side work" needs to be directly related to tip earning activity and constitute no more than 20% of the total time in any given workweek.  

      I know some kids who painted an entire restaurant for $2.13 an hour.  I made it a point to educate them and make a couple of phone calls on their behalf.  

      In many cases, it's even illegal to deduct uniform expenses from tipped employees.

      Deliver drivers also have it rough.  There is no law, per se, that requires reimbursement for vehicle expenses, but their IS most certainly a law that requires that workers never drop below minimum wage.  

      Please, if you work for tips, know your rights and stand up for your rights.
      Tipped Employees Under FSLA

      http://www.dol.gov/...

      http://www.dol.gov/...

      Rooting for Democrats!!!

      by SquirmyRooter on Mon May 12, 2014 at 11:04:32 AM PDT

      [ Parent ]

    •  Taxes are not calculated and due based (0+ / 0-)

      on sales.  That is the biggest myth in the restaurant industry.  Tips are to be reported by the employee to the employer and employees are to report 100% of tips regardless of the amount of gross sales.

      Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

      by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 11:54:55 AM PDT

      [ Parent ]

      •  The minimum witholding is based on sales (0+ / 0-)

        Anyone who has actually worked in the industry knows this.

        100% is the requirement.

        No "myths" about it.

        “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

        by RUNDOWN on Mon May 12, 2014 at 12:16:27 PM PDT

        [ Parent ]

        •  I have actually worked in the industry. (0+ / 0-)

          I also know the law.

          Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

          by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 12:20:24 PM PDT

          [ Parent ]

          •  Taxes are not calculated on sales (1+ / 0-)
            Recommended by:
            Fiddler On A Hot Tin Roof

            Servers pay income tax on their TIPS. They are legally required to report 100% of them but very few do. It's usually an untraceable cash transaction. Most will only report their credit card tips since that leaves a paper trail. Fiddler is right, taxes are based on tips not sales. Servers pay income tax like everyone else, if they paid tax based on what they sold it would be sales tax.

            •  They have their name on the check and get credit (1+ / 0-)
              Recommended by:
              bluenick

              for the check amount which is what they hold out taxes on.  They assign a % of the check as a tip. I'm not sure if they find the amount on the credit card to be valid if it was only a tiny percent or a large amt.  It may be law or vary from place to place.  And no, likely as not no server pays over the assigned amount.  If you were trying to live and feed your kids on those wages, would you choose food or rent over taxes  on tips?  I wouldn't.  

              •  I don't condemn (2+ / 0-)
                Recommended by:
                cowdab, RUNDOWN

                Under reporting of tips by tipped employees at all. In fact, my wife works at a bar...for tips. Although at this point, it is basically extra money for us, there was a time when we did feed our kids and pay the mortgage with those tips. Frankly, tipped employees aren't given much in the way of federal wage protection so more power to them if they don't report their cash tips. If the government will allow the restaraunts industry to run amok and skirt the labor laws hat apply to nearly every other industry than I think it's only fair if servers claim just enough tips to account for credit card tips and let the government have the $2.13/hr to cover income taxes on $7.25-$9 or whatever the credit card tips equate too over the course of a shift. Talk about corporate welfare....the restaurant industry is the epitome. Customer subsidize their labor costs even though the employee has not entered into a formal agreement with them like they have with the employer.

  •  It's time to end this nonsense. (10+ / 0-)

    No one should have to count on tips for survival. We're already paying more for a meal in a restaurant than the price on the menu. I always tip 20 percent. Let them jack up the price of a meal a little, and let the customer leave a modest tip to recognize good service (as is done, say, in Europe) and pay waiters a fair wage.

    SPES MEA IN DEO EST.

    by commonmass on Mon May 12, 2014 at 09:21:34 AM PDT

    •  I've read very interesting articles about this (5+ / 0-)

      by a restaurant owner who completely eliminated tips.  

      Apparently, there's a subsection of customers, mostly men but not exclusively, who become furious when they are not allowed to tip.  Apparently it's some kind of weird power/sex trip for them, deciding how much the (pretty) woman serving them food makes.

      According to the restaurant owner, his employees actually felt more free to flirt or dress sexy knowing that their earnings did not depend on it.  The majority of customers then got to enjoy their genuine better moods where the weird sexually-tinged overlording part was removed.

      But like I said, some customers really lost their shit about this.

      © cai Visit 350.org to join the fight against global warming.

      by cai on Mon May 12, 2014 at 01:49:35 PM PDT

      [ Parent ]

    •  In Germany, a line for "tip" was never there.... (0+ / 0-)

      I spoke with my friend the first night we went out and wondered why there was no line for "tip" on the bill. I was told that tipping is not expected in Germany, waiters earn a living wage and are compensated by the restaurants.  Of course you could leave a tip for good service but it is not expected.  

      Confucius say: "Man who want pretty nurse, must be patient."

      by Lencialoo on Thu May 15, 2014 at 06:13:29 PM PDT

      [ Parent ]

      •  Most restaurants in Germany do this (0+ / 0-)

        I encountered one in Berlin back in the 1990s where they added a sticker (in English, IIRC) to the bill telling the customer to include a tip. Needless to say, I never went back there.

        Yes, it was an isolated incident, but I was offended by that act. Especially since I was an Ugly American & often tipped. (I figure working people can always use a little extra money -- even if they shake their heads & mutter "Amerikaners sind Narren.")

  •  Just stop the ripoffs (4+ / 0-)
    Recommended by:
    RUNDOWN, Vatexia, Johnny Q, cowdab

    Tips are an excuse for restaurants to pay low wages. Those that charge a "service charge" should distribute the whole amount of money to their staff or it is a fraud on both them and the customers.  Owners should learn not to hide the charge for their meal behind "service charges". Even "cover charges" are dubious - you are paying for a few cheap bits of bread and the use of the salt and pepper cruets.

    The flip side of course is the very, very few individual servers who make high tips but do not declare all of them for tax (taxi drivers are another but probably bigger group).  Proper wages should also eliminate some of this tax evasion.

    "Come to Sochi, visit the gay clubs and play with the bears" - NOT a Russian advertising slogan.

    by Lib Dem FoP on Mon May 12, 2014 at 09:22:53 AM PDT

    •  Very, very few meaning high-tipped servers (1+ / 0-)
      Recommended by:
      bluenick

      or servers who do not report 100% of their tips?

      Because I can assure you that the number of servers who do not report 100% of their tips approaches the 100% mark.

      Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

      by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 11:57:55 AM PDT

      [ Parent ]

      •  Its a virtual certainty (0+ / 0-)

        That nearly every server does not report all their tips. Does any industry primarily driven by cash transaction report all of it? No way. It's impossible to prove via IRS audit, how much someone did or didn't make unless they reported less than their credit card tips. I would hazard to guess the only servers that report anything close to 100% are those doing things like purchasing homes and cars and don't have a spouse or partner providing verifiable income. Even then it is probably only for a finite time period, like 3 months or a year to establish a true, verifiable income level. My wife has worked in the industry for 15 years. She can't name one person among the hundreds she has worked with that reports all their tips, all the time. Most servers at bars or nicer restaraunts make decent money plus favorable tax treatment with w-2 income under $30k although that may only be 50% of their income. I challenge anyone to work for cash exclusively and report all of it. Most of the time this would lead to a negative balance with the employer come paycheck time. $2.13 does cover income taxes and FICA on $800/wk or even $500.

  •  To me... (7+ / 0-)
    Recommended by:
    Vatexia, Kevskos, LinSea, Johnny Q, cai, SMWalt, cowdab

    I think the real problem is that we have allowed the restaurant industry to force its customers to pay for their labor directly.  The tipped min wage should be abolished and the min wage raised. Why should restaraunts be allowed to artificially depress their prices because they pay for very little labor. This system rewards people that don't tip or don't tip well because the are receiving their meal at a 15-25% discount as the other customers subsidize them by leaving adequate tips. I wonder what the savings on public assistance programs would work out to annually if every server in America were paid $10.10 an hour by their employer. Not to mention the increased tax collections as most servers report half or less of their tips and who can blame them for this? The government is providing them with little to no workplace wage protection.

  •  Uh, hmmm.. (3+ / 0-)
    Hovland tells Mother Jones that before she got in touch with the Restaurant Opportunities Center last fall—to find out why she was getting zero-dollar paychecks—she had no idea that her employer was supposed to make up the difference in tips. "We never logged our tips or reported them to our employers," she says, unless they were on credit cards. She adds, "Even after I shared information about the minimum wage difference with coworkers, nobody felt comfortable asking employers about it."
    This is very illegal:
    Employees who receive cash tips of $20 or more in a calendar month while working for you, are required to report to you the total amount of tips they receive. The employees must give you written reports by the tenth of the following month. Employees who receive tips of less than $20 in a calendar month are not required to report their tips to you but must report these amounts as income on their tax returns and pay taxes, if any.
    That's why no one asked for their minimum-wage check, it was because they were breaking the law.
  •  "one in five lives in poverty" (2+ / 0-)

    What is the percentage of the population as a whole that lives in poverty?  How much different is it from "one in five?"

    Their real God is money-- Jesus just drives the armored car, and his hat is made in China. © 2009 All Rights Reserved

    by oblomov on Mon May 12, 2014 at 12:06:48 PM PDT

    •  Moreover, one in five lives in poverty (0+ / 0-)

      if you believe the income they report as genuine.

      It is no secret that servers are often told they must report 8% of gross sales as tips, but generally make more than that.  How many would still be "in poverty" if they reported 100% of tips! as required by law?

      Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

      by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 12:36:22 PM PDT

      [ Parent ]

    •  I'd also be willing to bet (1+ / 0-)
      Recommended by:
      cowdab

      That a lot more of them would be in poverty if they didn't have a partner or spouse contributing a second income, OR weren't living at home as dependents to their parents because they can't afford anything else.

      We are all students and teachers. I often ask myself: "What did I come here to learn, and what did I come to teach?"

      by nerafinator on Mon May 12, 2014 at 02:21:40 PM PDT

      [ Parent ]

  •  The diarist notes that forcing employees (2+ / 0-)
    Recommended by:
    OrganicChemist, cai

    to ask for minimum wage, i.e, telling the employer that tips were insufficient to bring wages up to the minimum wage and the employer has to make up the difference, is a recipe for wage theft.

    This is a valid point.  However, the Labor Department has regulations in place that alleviate this problem somewhat.  An employer must tell the employee certain facts beforehand, such as the fact that tips plus wage must equal the minimum wage.  Failure to do so means the employer cannot take advantage of the tip credit and must pay the full minimum wage of $7.25 per hour.  Link.

    If the Obama administration really wanted to protect low-wage tipped workers, a few high profile class actions by the Labor Department for back-wages would send a loud message across an industry where even respected brand names simply flout the law.

    Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

    by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 12:31:08 PM PDT

  •  How much per hour with tips? (0+ / 0-)

    I used to work as a parking valet at the tipped employee rate but with tips I averaged about $15/hour.  This was 10 years ago.

  •  My understanding is that even a generous (1+ / 0-)
    Recommended by:
    catwho

    tip can be divided among many people; not just other waitstaff, but the host, busser, and even kitchen staff.

    I read a rant a few years ago (pre-GFC, possibly?) about how, if you couldn't afford to tip 30%, you couldn't afford to eat out.  When I was growing up, a standard tip was 15%, 20% if the service was excellent.

    I rarely eat out unless someone offers to treat me -- I can't afford it, and I know it.

    But much of the restaurant industry -- basically everything between fast food and the super fancy places -- is built on the backs of the disappearing middle class.  People need to be able to afford to eat out in order for restaurants to survive.  

    Restaurant owners say that they'd lose business if they raised prices to cover higher wages, and maybe they would.  Maybe more people really can't afford to eat out, and just don't know it.

    I'm all for seeing that waitstaff making a living wage, but this is a problem that is much bigger than just them.  

    © cai Visit 350.org to join the fight against global warming.

    by cai on Mon May 12, 2014 at 01:39:46 PM PDT

    •  As I said above, it is illegal to (0+ / 0-)

      force tipped employees to share their tips with non-tipped employees.  Kitchen staff is definitely out.  Busters and hosts are a conundrum.  I have never tipped a busser or host, but in fancy places where I will never be, maybe the maître de gets a tip.  

      I wholeheartedly support splitting tips with bartenders.  Every time a bartender makes a drink for a waiter, she is taking time away from her own customers, and hurting her own tips.

      Ethical problem: if you had a time machine, would you go back and kill Cheney before he took office?

      by Fiddler On A Hot Tin Roof on Mon May 12, 2014 at 09:47:42 PM PDT

      [ Parent ]

    •  I worked in a lot of restaurants ... (1+ / 0-)
      Recommended by:
      maregug

      … and never earned enough to be considered a member of the middle class. Busboys, hosts and hostesses, dishwashers, prep cooks, line cooks, assistant managers, wait staff -- all usually work part time for low wages at crappy hours. Look in any restaurant kitchen and you are likely to see immigrants, many in the U.S. illegally. Benefits and paid vacations are nonexistent except for managers and executive chefs. No, there is probably no more exploitative industry in the U.S. than restaurants.

      Americans are in real trouble. The oligarchs are misanthropes.

      by Road to1 Escondido on Thu May 15, 2014 at 05:35:01 PM PDT

      [ Parent ]

  •  I'm so glad and proud (2+ / 0-)
    Recommended by:
    SMWalt, cowdab

    that I live in a state where restaurant and other tipped workers make the regular state minimum wage, which is $9.10 here in Oregon as of January this year. Still not a great living, but a hell of a lot better than 2-something an hour. Ugh.

    We are all students and teachers. I often ask myself: "What did I come here to learn, and what did I come to teach?"

    by nerafinator on Mon May 12, 2014 at 02:24:10 PM PDT

  •  Re (0+ / 0-)
    Hovland tells Mother Jones that before she got in touch with the Restaurant Opportunities Center last fall—to find out why she was getting zero-dollar paychecks—she had no idea that her employer was supposed to make up the difference in tips. "We never logged our tips or reported them to our employers," she says, unless they were on credit cards. She adds, "Even after I shared information about the minimum wage difference with coworkers, nobody felt comfortable asking employers about it."
    Especially since reporting the situation to the employers will force the servers to report 100% of their tips as taxable income, which for most servers will dominate any piddling few more dollars they might get sometimes due to the minimum wage thing. Tax fraud is profitable if you can get away with it.

    Not to mention serious IRS trouble if someone gets the idea to take a look at what these servers make vs what they report.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Mon May 12, 2014 at 03:14:04 PM PDT

  •  The always pay less in wages because of tips (1+ / 0-)
    Recommended by:
    llywrch

    except many, many restaurants force waiters to pool their tips. So a bad waiter gets as much as a good waiter. Not to mention they must share them with the bus staff.
    Waitstaff is getting screwed.
    We would do better to raise the minimum wage for them to at least $10 an hour and then pool tips to be divided. Additionally, we could adopt policies of European countries who add %15 automatically to the bill. Then they can disburse those tips to waitstaff (and buss staff) based on hours worked.

    Isn’t it ironic to think that man might determine his own future by something so seemingly trivial as the choice of an insect spray. ~ Rachel Carson, Silent Spring ~

    by MA Liberal on Thu May 15, 2014 at 05:06:32 PM PDT

  •  Foodservice workers are galley slaves. (1+ / 0-)
    Recommended by:
    Major Kong

    I now a chef ( he’s brilliant!) works 80hr weeks, no vacation, no breaks, on permanent call, missing his index finger!

  •  they don't log tips because (0+ / 0-)

    they don't want to be taxed on them.  another reason to get rid of the two tier system, a) it pays people more b) it brings in more tax revenue.

  •  The flip side of this story (1+ / 0-)
    Recommended by:
    Fiddler On A Hot Tin Roof

    is in the server's comment that ""We never logged our tips or reported them to our employers." That's standard practice, and it's illegal.

    In my years as a tax preparer, I never had any server who kept track of cash tips, much less reported them to the employer -- which means they were not paying taxes or Social Security on them. (It's the taxes on tips that give people a zero paycheck -- and means they are getting Social Security credit for those earnings, as well as it counting for EITC -- and ACA subsidies based on reported income.) They just put the cash in their pockets without reporting it. I can easily understand how underpaid people do that -- and the record-keeping is a pain.

    But if we're going to hammer restaurants for underpaying people, the restaurants are entitled to know what people are really taking home at the end of a shift, not just what's on credit cards that they can't help reporting. And people have to be willing to pay taxes on all their income, not just what's easy for the employer and the government to find.

  •  Raise the minimum wage for tipped workers first (1+ / 0-)
    Recommended by:
    llywrch

    That would make more sense

    "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

    by gjohnsit on Thu May 15, 2014 at 06:12:50 PM PDT

  •  Simple. Pay ALL restaurant employees minimun (2+ / 0-)
    Recommended by:
    Urban Space Cowboy, llywrch

    wage regardless of their position.  I have never understood this pay less to waitresses and waiters because they get tips nonsense.

    It makes no sense.

    Only then, will a tip really be a tip.

    When in college, my daughter soon learned that waitressing at a local franchise was a loser when the pay for the few hours they wanted her there paid less than the gas it took to get there.  

    It only took a few times when college students who left no tip at all, or six seniors at a table thinking 25 cents was a great tip for her to exit this job.

  •  Wage law is one of the most misunderstood laws. (0+ / 0-)

    Many employers do not understand their responsibility, and the workers haven't a clue.  Most of the time they (employers and employees) simply do "what has always been done".  What is needed here is a bit of education.  Way back when I made my concerns known to the DoL regarding my employer.  It took 2 years for them to review the records and interview the current employees.  I don't know what happened exactly but I hope that in addition to reviewing the law with employers that they also had a seminar or something for the employees alerting them to their rights.

  •  Tipping (0+ / 0-)

    is simply payment for services like any other.  Keeping it voluntary is a demeaning, ugly practice and we should end it.  I just got back from Italy where I signed maybe a dozen credit card payments for dinner, none of which had a line for a tip.  It should be part of the bill.  If you don't like the service, don't go back.  If it's exceptional or you feel generous, leave a little more on the table.  

  •  So much quibbling and punching down! (0+ / 0-)

    Hey all you privileged diners: you wouldn't have to fret about reporting taxes on tips, or about welfare tip queens making zillions of dollars that they don't report as taxable income, if more states (and maybe, possibly, the federal government) followed Hawaii's lead and made ONE SINGLE MINIMUM WAGE THAT APPLIES TO EVERYONE.

    Consider from a logical viewpoint: with two different "minimum" wages, the one isn't really the minimum, is it? And forcing restaurant workers to beg for scraps is revolting. Legal systematic underpayment to workers encourages the view that they're second-class citizens; a view that the "rarrrr they're not really making $0.00 they're making twenty-some!" self-righteousness engages in.

  •  Lets Enforce IRS Collection of Tips (0+ / 0-)

    is the endpoint of minimum wage hike for restaurant industry.\

  •  Back in the 80s (0+ / 0-)

    When I was in college, I worked in a restaurant as a waiter, and the wage then was 2.01 per hour.  I can recall working some lunch shits when I made $15-20 after tipping out the bus boy and bartender.  Plus the $14 I made on he clock.  Needing to then claim 15% of my sales for tax I earned $20 for a days work, with that said I did work dinner shifts too, and on a weekend I would earn $200+ after tipping out the bus boy and bar.  So it balanced out.  Could I have left and found a better restaurant, yes, but I stayed accepting my low wage.  So this dilemma has two answers, raise the wage to $15 -20 per hour with the national minimum wage, or these workers, resign and find better restaurants, the owners will have no servers and be forced to pay up.  Or go out of business.  Either way the worker wins.  

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