Some is, but at high end places where most payment is made by credit card - those tips are taxed. Cash tips, or at least a portion of them, can easily go unreported but tips given on credit cards are reported and taxed.
Ml
At higher end restaurants there is more staff taking a cut of the table tip. For example, busser, food runner, bartender, back waiter, front waiter…
Most restaurant transactions are by credit card. In addition, restaurants are required to keep track of tips – total amount taken in & who gets what – and this is reported on payroll as additional employee income.
If audited, the auditor will assume the same % tip was made on cash sales that was made on cc sales.
Some restaurants require the staff to pay the cc service fee (~3%) back to the restaurant on their cc tips.
Until very recently, I believe it was illegal for restaurants to force waiters to pay into a tip pool that included non-tipped employees, such as a busser.
I remember when uber first started they specifically told people NOT to tip. They said it was a cashless service and didn’t even have a way to tip on the app. It was one of their selling points over using a taxi. We were early uber users and followed this and then found out that “rule” seemed to have faded away and realized we were the cheap non-tipping riders the drivers probably hated. They just added the option to tip on the app the last 2 years of so.
I hate tipping but understand it’s a necessary evil. I tip waitstaff and food delivery folks and my hairdresser. If I pick up food I tip, though probably not as much as when I’m being served. I am honestly inconsistent about tipping at hotels. I often forget and rarely have cash but am trying to be better, especially for longer stays.
I don’t know about legalities but my friends who are servers have been forced to pool their tips for years at places ranging from high end steak houses to coffee shops. A % of the total goes to each person based on their position. The harder workers of course hate this and I was surprised that my tips weren’t going to the person I intended. I tip percentage-wise based on service but it is not as direct as I thought.
I tip cash to uber/lyft, food delivery people, my hair stylist and shampoo person. I use credit or cash for restaurant servers and some counter people. Usually 19%ish unless it’s a low bill such as in a coffee shop so a higher % is deserved. Poor service which means a bad attitude reduces the tip to 10%. I feel guilty doing this so maybe once every few years and after lots of patient consideration. This is all post tax including all the local fees.
Petty since the fees are written off in part on the businesses’ taxes.
No, that’s not quite accurate.
There are other employees classified as tipped employees. Ex: front waiter, back waiter, food runner, busser, bartender, bar back…).
Here in IL the minimum wage for a tipped employee is $5.55 per hour. Of course, the business can pay more per hour, & some do, for some positions.
It is up to the business owner how the table tip is distributed to the rest of the tipped employees.
I would not assume that the hard working servers hate it.
It’s the cost of doing business (in your station).
It’s very difficult to give good service and take care of the guests in your station without your team.
In Massachusetts, I believe the law explicitly forbids sharing tips with back of the house staff.
I may not have had that exactly right, but in 2018 there were legal changes to federal law on what classes of employees could be included in a tip pool.
https://www.dol.gov/whd/regs/compliance/whdfs15.pdf
https://www.nolo.com/legal-updates/changes-to-federal-law-on-tip-pooling.html
That may be due to the widespread severe shortage of cooks and an attempt by some businesses to give the cooks a raise by taking from the tip pool.
At least in IL, there are several types of FOH positions that are categorized as tipped. The BOH positions are categorized as regular hourly. Each is subject to a different minimum wage.
Other states as well.
Not hard working servers, hard workers period. You definitely need your team but some people don’t work as hard this making it more difficult for everybody in every FOH position but they still get the same tip %. Not fired due to labor shortage, favoritism/nepotism and whatever else.
The pool is not a perfect system but I guess nothing is.
^
There are many ways to divide the tips.
The tip-out might be a % of tips. It might a % of sales. It might be pooled & divided evenly.
Sometimes servers are paired with certain assistants all the time bc they are the all star team. Sometimes it rotates or changes all the time.
Sometimes the best servers get the best customers. Sometimes not.
It’s difficult to make generalizations. Each place will have their own rules and traditions.