Stealling?
It may be a violation of California law but that doesn’t make it stealing.
… or perhaps you are a bit over the top with your moral or ethical judgements??
It may very well be bad business but it seems perfectly fair to compensate people who do the same things the same way. That they also receive add’l compensation based on other factors (the investment in and risk of owning a business) doesn’t negate that.
Reading this: "So, because of the way tips are received, I just receipt all the tips in as income. Then everyone gets 10% of that total. So, they get 10% of tips received even when they aren’t there. Even if they have the day off, they still get 10% of the days tips. " but you mention having only 4 employees. Each of those 4 gets 10% of all the tips, so a total of 40%. Where is the other 60% going? to you and your spouse?
While I don’t have a huge issue with your getting some of the tip money since you’re manning the tables etc. when nobody else is there, others have suggested that it’s not kosher to do so and may not even be legal.
As long as the income is documented and the appropriate taxes withheld, and declared in the W2s, I wouldn’t fret about the taxes. I don’t recall whether tips are subject to Social Security rules (I would hope not).
Given the type of business, you can’t really give tips to the individual servers as a full-service restaurant would, so pooling is really the only option - the dilemma seems to be in how the pooling is done.
Personally, I’d suggest you go with an approach where you segregate out tips received when you’re solo (no employees), vs. when you have employees, and divide the ‘with-employees’ tips up among those employees based on hours worked. At the very least, doing this “on paper” for a week or two will let you see whether they’re benefitting or losing out by your current approach.
To quote Office Space:
I walk into a deli. The person behind the counter greets me in a friendly manner, tells me the day’s special, and takes my order. There is no one else working so it’s clear that this same person will make my order and bring it out to me. I appreciate that and add a tip when I pay. The meal I’m served is beyond expecations and the worker offers to refill my drink even though it’s a self-service fountain. I leave an extra buck on the table. Little do I know the person I left a tip for is the owner and by CA law must give my tip to employees that were nowhere to be seen during my visit. Maybe the owner is happy to do it but the only single reason it is even close to stealing is due to CA’s warped definition. But yeah, +1 for an Office Space quote.
I have worked a few jobs similar to a deli (with a counter) and this is how we did it in all the places I have worked. In fact, we would split up the tips whenever someone started or left a shift to make sure your got your share for when you were working.
FWIW, this was in California.
Why does everybody get ten percent of the tips? Where did the ten percent come from? What happens to the other ninety percent? Am I just sleep deprived?
Help.
From this, I think you are short-changing your employees a bit. They should be getting one fourth of 60% of the tips each (so 15% of the total), not 10%. I agree that clearing out the tip jar when people come on shift is really the only fair way to do it.
I also assume that you are the busiest when the extra help is present, so that is when the most tips would be generated, no? Because of that, using time in shop to determine percentage seems a bit off base.
Well, I actually had six employees at one point and wasn’t sure how many we’d keep. I also had my first two employees at 25% each until we hired the 4 others.
It would be difficult to count the jar during the lunch rush though since I stagger the help a bit. I would have to stop waiting on customers to do it.
I’ve talked to all my remaining employees and they are fine with how I’m doing it. They are allowed to do homework when things are slow and they get a lot of free food and I never refuse them a time off request. But perhaps I need to increase the % a bit until we hire more.
Thanks for the input everyone.
I think it’s ok to keep dividing all the tips between all the employees, regardless of when they worked, but you shouldn’t be taking a share of any tips given while any employee is on the clock. That’s the part that is technically illegal and could look like something really foul: remember, these rules were put in place because of owners who took a 50% “commission” off any tip their waiters received and stuff like that. If you doubt that’s possible, look at the thread right now in IMHO where people are discussing “dine and dash”: even though it it totally illegal, it’s still not uncommon to hear of a server who is told they have to pay for the entirety of a skipped check–and servers are a class of people who usually do not have the ability to fight this sort of thing even when they know it’s illegal.
So you want to avoid even the appearance that the owner is taking any of the server’s tips. Whether or not the tips are distributed perfectly fairly among the servers is much, much less important. So what I would do is some time before the first server gets there–when it is still slow–bag the tip jar, mark the time and date, and put it in the safe. Later, you can count and enter that as income. It’s 100% yours. Then, when the last server leaves, bag the tip jar again. That gets split evenly between all four servers at the end of the week. End of the day, whatever is left in the tip jar is again yours.
Yeah, the math is right:
40% of business -owners only time.
60% - two owners, 4 employees - ergo - 10% per person, including 2 owners.
However, Manda JO and others are right. Legally, it seems, you two should not be partaking of tips when the other servers are working. Therefore, it should be:
40% - owners, their own time only.
60% - split among 4 workers (unless there is a serious imbalance in hours among them, then go by hours, maybe averaged over a week if necessary to even out the irregular nature of tips).
If anyone objects to this, then keep 2 buckets, and empty the tip jar before the first worker starts into Owners Bucket, and empty tip jar into Workers bucket when the last worker leaves. For credit/debit, can you do a cash register summary at shift change? Split accordingly, and then when the numbers work, tell the grumpy worker “I told you so”.
I assume this started because the girl got a hefty tip, then found her share for the day did not come close to that big tip.
I have a niece-in-law who worked in a fancier restaurant in a tourist town about 10 years ago - the owner took 100% of the tips because “we just opened the restaurant and startup costs are so high…” From this sort of behaviour from one bad apple comes laws that make things difficult for the nicer small business owner.