Talk Elections

In the U.S. it is legal for an employer to take the estimated amount of tips a tipped employee (typically waitress type positions) will make and deduct some/all of that amount against the minimum wage and then pay an employee less than the minimum wage. This practice is known as a 'tip credit' and is an issue in federal and state law.

The federal minimum wage currently allows for a tip credit as do 43 of the 50 states:

http://en.wikipedia.org/wiki/Fair_Minimum_Wage_Act_of_2007#Omissions


http://www.dol.gov/whd/state/tipped.htm


I oppose these tip credits as tips are not supposed to be commissions but rather be rewards/incentives for service. I also doubt the U.S. would have this mandatory tipping culture (tipping out of guilt because you know the employee makes less than the minimum wage?) that other countries apparently don't have if we didn't have this tip credit in federal or state law (I bet these other countries don't have tip credits).

What do you think?

Also interesting:

You can make a lot of money as a waitress in those 7 states without a tip credit due to the mandatory tipping culture: full minimum wage + frequent tips with no tip credit = can make $25-50k+ a year if full-time depending on the # of customers served and the $ amount of tips

Oregon is one of the 7 states without a tip credit and it was an issue in our 2010 governor election with the Republican candidate (and the restaurant-owner lobby who pushes for tip credits everywhere) wanting a tip credit for Oregon basically arguing that waitresses make too much money while the Democratic candidate opposed adopting a tip credit.

Tipping is very very annoying in the States, but I still do it because I know how poorly compensated they are.

Oppose credits strongly. Adequate wages should be paid and tips, if given, should have a rewarding nature for above average service.

the whole thing is a big tax evasion scheme.  obviously.

No, obviously all people should be paid at least $15/hour, and any tips should just be extras not counted in any way.

I certianly do not think that employers should be allowedto deduct 'expected tips' as imo tips should only be given for exceptional service if the customer wants to (rather than being guilt tripped or having it automatically added to the bill, no matter how poor the service actually is). Besides even if the US tipping culture continues then seeing as the US minimum wage is abysmal (once converted its approximately a third or a quarter of the NZ minimum wage as far as I know) then it actually isn't a big deal. Also the federal government should stop taxing on expected tips and come up with a system to work out the exact amount of tips earned and then tax that amount as they would any other source of income.

NZ has a $20-30 minimum wage?

I thought from memory that the US minimum wage was about $2.50 US with the exchange rate at I think around about 60 cents to the NZ dollar with the NZ minimum wage around about $13.50NZ (indeed many political groups and parties are calling for a $15 mimimum wage, I remember seeing the Workers Party and the Unite Group organising a petition around campus for this a couple of years back and became an official policy of the Mana party led by controversial far left MP Hone Hawerira possibly in an attempt to win more non-Maori Party votes and thus get an extra seat or two for his party in parliament under our MMP system) which from my very rough calculations in my head gave a minimum wage rate about 3 or 4 times that of the US although my calculations could be way out.

Yes.

Keep in mind that under current law, employers have to pay payroll taxes on the reported tip income that is deducted from the employee's minimum wage.  So do employees, and to a extent the reason for the $2.13/hr floor is intended not to ensure that there is a minimum amount the servers make, but so that tipped employees have something out of which automatic deductions for taxes can be made instead of leaving those employees liable to a huge end-of-year unexpected tax burden or having to pay their employers for the privilege of working someplace that offers the chance to earn tips.

In this country there are many service jobs for which tipping is expected even for ordinary service. To say that those expected tips should not be considered wages is ludicrous.

Note: I'm generally opposed to minimum wage laws in the first place.  An earned income floor is less disruptive to the price signals of what labor is worth if implemented via a government subsidy of the low-waged, not a flat floor on minimum hourly income. But even if I did support minimum wage laws I think I'll still support counting tips against that minimum.

Minimum wage is $7.25; that's 8.69 NZD

A recent article on this that has some more background on the issue (plus a cameo appearance by Herman Cain!): http://www.huffingtonpost.com/2012/06/02/minimum-wage-restaurant-workers_n_1515916.html




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Doesn't this kind of defeat the whole purpose of tips?

No, because there should be no minimum wage.

This is why I always tip 15-20%, regardless of the quality of service.

It's still annoying as hell when in the U.S.

First the prices don't include tax...then they want 15-20% on top of that? Just tell me the damn price up front.

Je-sus! The minimum wage for restaurant employees is $2.13!!!???

This is something Tom Emmer attacked here and implied wait staff were ripping off the state. Ah the mind of a teabagger...

For someone who works tables or the bars, yes, but with tips they tend to make more than a fast food worker who is likely paid at or above the federal minimum wage of $7.25/hours. Many states also have their own minimum wage for this category - http://www.dol.gov/whd/state/tipped.htm.

No, because tipping should be banned and all employees should be either paid in wages or salaried. And to compensate for the loss of tip income, we need to raise the minimum wage to $10 an hour, if not $12 an hour.

How exactly are you going to ban tipping? If I leave some money on the table and have left the place, what do you think is going to happen to it?

^ This. What on earth's the point of tipping if it's just going to count as part of the employee's regular wage? ??? If you like your service, give the person a bonus. That's it.

Likewise, I'd also tip the normal amount in the US, considering how atrocious the minimum wage for restaurant employees is. I'm kind of stunned that this system is accepted.

I meant as a means of paying employees.

The minimum wage for restaurant employees is the same as for everyone else: $7.25. If the $2.13 plus tips don't add up to $7.25, the restaurant is expected to kick in the difference. Of course, if a waiter is routinely forcing the restaurant to bump their pay up in that manner, it's quite unlikely they'll last long as a server at that establishment.

Good man!  I've been advocating $15/hour on this forum for several years.

if you're not paying on a card the employee can 'claim' less in tips than he actually receives.  he also can exceed the $7.25 figure.