May 1, 2008

ValleyViewpoints

Tips help wait staff to survive

Editor,
I am writing regarding Mr. Bob Boydston's letter about tipping. Regardless of how someone may feel about tipping, there are certain payroll implications for the servers.

I worked for many years at a large payroll processing company and had many restaurants for clients. Restaurants with a certain minimum number of employees were allowed to take what was called a tip credit. This allowed the employer to pay servers less than the minimum wage based on the expectation that the server could expect to receive tips to offset the lower wage.

In regard to employees not reporting the tips, there was a program that allowed employers to enter the gross receipts for the period and employees would automatically have 8 percent of the receipts added to their gross wages so they could then be taxed. This assumes an 8 percent tip from every customer.

This would happen regardless of the size of the tip, be it 25 percent or 0 percent. In some cases, restaurants used both the tip credit and the gross receipts program. So you can see how the combination of a tip credit and a low tip might help to create a less than cheerful server.

Caroline Williams
Almaden Valley

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