Tipped Employees are a type of wage-earning worker that may receive tips from customers. They are often employed in the restaurant industry and are paid a lower minimum wage than non-tipped employees.
Processing payroll for tipped employees can be complicated due to additional tax withholding and reporting requirements. An experienced payroll service provider can help you ensure compliance with all required rules and regulations.
Waiters and Waitresses
Awaiting tables, taking food and beverage orders, and delivering food and beverages to customers are some of the main duties of a waiter or a waitress. They also might be charged with distributing menus, managing trays of drinks and meals, removing dirty plates and cups and resetting tables. In restaurants that serve alcohol, they might verify that customers are of legal age.
Awaiting tables employees typically earn a combination of hourly wages and tips. The minimum wage in most states for tipped workers is $7.25 per hour, but many restaurants use the tip credit provision to allow servers to satisfy this requirement by paying a lower cash wage (at least $2.13 an hour) and accounting for the rest through tips. Waiters and waitresses generally receive the highest tips for their services. They should be comfortable using their skills to create a positive experience for each customer.
Bartenders
Bartenders make a living by receiving tips on top of their hourly base wage. They are most often tipped by customers at bars, but they also work in restaurants, movie theaters, grocery stores and even on planes.
Their job duties include greeting patrons, reading and listening to customer requests, making recommendations, taking drink orders, serving draft and bottled beer, wine, and cocktails, and verifying that customers are of legal drinking age. They may also take food orders and work with the kitchen staff to ensure that food is served promptly.
To show appreciation, it is customary to tip $5 for a cocktail and $1 on each additional drink. Some bartenders are tipped as much as $80 or more per shift. Employers must pay payroll taxes on reported tips, just like they do on regular wages.
Bellhops
Travelers often leave tips for bellhops (also called hotel porters, or bellboys) when they check in and out of hotels. These workers carry your luggage, escort you to and from your room, and assist with other guest services such as getting taxis or arranging transportation.
How much you tip a bellhop depends on a few factors. A general rule of thumb is $1-2 per bag they lug to your room, but that can vary based on the size and weight of your bags and the quality of service you receive. They also may help you with basic concierge duties like providing directions or making restaurant recommendations. They are most commonly found at full-service hotels and resorts. They usually wear bellhop uniforms, which have a military origin.
Cooks
Cooks prepare food in restaurants, hotels, cafeterias, and other establishments where meals are provided. They follow recipes and are responsible for ordering ingredients, measuring food, and preparing the finished menu items to be served.
If your business employs cooks, you may include them in a tip pool with employees who perform substantial customer service activities and regularly receive tips. However, as the DOL has recently clarified, cooks who engage in customer contact infrequently or to a trivial extent cannot be included in a tip pool.
All cash and non-cash tips your employees receive are considered income and must be reported on their W-2. You must also withhold federal income and FICA taxes on these amounts. You can count an employee’s tips toward the minimum wage, but you must notify your employees and maintain records to ensure compliance with FLSA requirements.
Waiter/Waitress Combinations
Waiters serve customers food and drinks in restaurants, cafes, hotels and other venues. Generally, they receive tips on top of their hourly wage.
While waiting-on roles don’t normally require formal qualifications, vocational diplomas or a good standard of general education can give candidates an edge in the interview process. Previous customer service and waiting experience is also valuable.
Experienced waiters and waitresses can earn up to £20 an hour, depending on the size of the restaurant. Some specialise in advanced types of service, such as silver service and wine tasting. Some employers split tips between staff, which is less likely to cause resentment among team members. However, this approach can reduce the amount of tip each member receives. It also increases the likelihood of mistakes.