Chain Leader

Mr. Farkas, I beg to differ. I generate a great deal of tips that my delivery drivers get paid. I also generate delivery fees that they get paid. I don't take anything from them from credit card payments but I would really like to sometime very soon. There are times they are making $60-$80 for one drop and I'm forcing that tip so shouldn't I be able to take a little out to cover the exorbitant fees the processing company charges us?

Our company has been charging ( the server )the transaction fee on the tip portion of the check for years. I belive that this is fair. This is the only fee that we have for the FOH staff. Many other companies have programs that charge for family meal and uniforms. I admit that times and margins are changing and this is one change that will cost companies some good employees

I think it is unfair for employers to pass on credit card fees to the waiters. It is part of doing business similiar to a marketing cost.It should be absorbing in there operating costs. I was also told that they are then taxed on it. How fair is that.

Just as we, the operators, pay a fee for the transaction, the servers should cover their end as well. Concerning taxes on tips, write your Congressional Representative, as they are the ones who make said laws.

WTF? Servers pocket uncounted $$ in cash. To complain about one or two percent in "credit card tip reduction" is nonsense. And I write this as a SERVER, not a manager.

It seems that this practice is old hat to some and new news to others. While making tipped employees reimburse restaurant owners is legal (except in California and Colorado), it obviously creates resentment not only with staff but with consumers as well. The only "shady" area is that there are different rates charged by the many banks and credit card companies. Usually the staff paying these fees are required to pay a flat rate for all credit cards transactions. That is not transparent and leaves lots of room for abuse by employers. Additionally, if employers are DEMANDING these reimbursements as part of continuing employment, then the amounts collected should be reflected on payroll stubs each pay period. To date, I have yet to find any tipped employees who are provided a record/receipt of money demanded by their employers. These payments do not appear on year-end W-2's either. It has the appearance putting out "tip-jars" for employers. Do employers report these reimbursements as revenue? It is a sticky issue with abundant margin for abuse. Paul C. Paz - www.WaitersWorld.com

I've been on both sides of this fence,but as wait staff is usually paid well below minimum wage and are required to pay taxes on these tips the small percent that banks charge should be a wash, also the convenience that businesses have for having this money almost right away in their bank account should be worth it after all this is why the charge is made in the first place years age you had to submit the copies of the charge slips and wait for your money. this charge is a convenience for the business to be able to accect the charge cards.

The employer helped generate the tip for the server by having a merchant account in the first place, so the server can certainly help cover the expense. They should also help cover the other expenses that the owner/company pays to generate the customers that then tip the greedy servers. There is the servers percent of the marketing, their percent of the kitchen staff, and for gods sake do not leave out the dishes that the servers blantantly expect the food to be served on. Oh, and don't forget the their part of the rent-without the employer paying the rent-the server would not even have a shot at earning their tip in the first place.- I'm sorry-but the one thing that I have learned in life after I became financially successful is that when anyone trips over dollars to pick up nickels- they will seldom ever get to the place where they have more dollars than nickels to count, and if I ever found out a restaurant was doing this-I would cease doing business with them immediately-on priciple

Since I own two restaurants in Colorado I only wish I could pass on the credit card fees associated to the tip portion of the charge. Expenses in a business are generated because they cause a financial benefit. The 3% expense that is charged to the business so that the wait can get a tip does not benefit the business. Do not forget that tipped waitstaff are the highest paid employees in most restaurants, sometimes more than management.

Dear Restauranteur2000: With Colorado's current tip-credit provisions, your investment per each tipped employee is $4.00 per hour. There is no incentive, pressure, or obligation for you to provide any merit increases for the entire lifetime of employment with you (even if they produce millions in revenue for you). From most any business vantage point, that is a heck of a deal, for revenue each of your tipped service-sales staff produces for you annually. I will assume you started with one restaurant and, based on the revenues built by your staff, were successful enough to expand to second unit. So even with you historically paying the fees on credit card tips you have done well building your business and employing many people. It is no secret that a good professional waiter in Colorado can earn far above a living wage. However, do not forget that you only pay $4.00 of that. Owners have no say in what diners give to the waiters. Very grateful and generous customers, who choose to reward their professional waiters, pay the balance. Not a penny over the $4.00 that you are required by law to pay comes out of your pocket so it is no expense to your operation. Yes, good professional waiters can sometimes make more than management. The waiters and customers are not the ones who determine management wages. The tipped employees are not responsible for low management wages. Owners control management wages. And thank you for taking all the risks so that others can have legitimate career choices in the restaurant and hospitality industry... including waiters. Respectfully, Paul C Paz - www.WaitersWorld.com

a better solution would be to shift to communism, wherein the all earnings goes to ths STATE and the state takes care of its people

The fact that servers may be the most highly-paid people in a restaurant has NOTHING TO DO with this credit card fee debate. Servers get a lot of flak about this (mainly from owners, in my experience) and it's totally unfair. Did anyone force you to become a restaurant owner? Is anyone stopping you from selling the business and becoming a server yourself? When owners complain about this, it makes you sound whiny, petty, and probably means you don't know how to run a business and therefore aren't making much money.

And now I'd like to weigh in on the debate over whether servers should pay their portion of the credit card fees. The truth is that decent arguments can be made on both sides. What it comes down to is whether you, as an owner, feel comfortable with nickel-and-diming your employees. Yes, we know credit card companies charge outrageous fees, the cost of doing business has gone way up, blah blah blah. Too bad. It's a tough racket being a restaurant owner and maybe you should give it up if it's too hard. As a server, I pay roughly $50 per month to my restaurant in these credit card fees. Money out of my pocket. That's a cell phone bill right there. I am a full-time student and I have a co-worker who is a single mother. Like I said, if you as a restaurant owner are comfortable taking this money for yourself then by all means, go ahead. But I applaud those restaurant owners who choose not to.

I've been the restaurant industry for 25 years.I read the comments from all the servers complaining about the unfairness of having to pay the cost of the tip-transaction fee and I wonder if anyone of ALL of these servers is reporting their cash tips to IRS???????? It seems to me that it is ok to cheat the government by hundreds of dollars each year by not reporting the cash tips, but we like to raise hell when someone deducts a 2% of the charged tips. Go figure.........

I've been on both sides--server and owner. In this case I think the servers are being conveniently self righteous. Most servers I work with like to insist that the tip is NOT the sale, but their own private domain in which the owner should have no place in. OK, let's go with that. You as a server sell $1000 on a given night and receive $150 in credit card tips. So what's mine is mine and what's yours is yours. In the case of credit card "discounts" (that word makes me sick!) The owner should pay the portion of the fee on the sale and the server should pay the portion on the tip. It is not nickel and dime stuff. If we paid well over 75G in "discounts" last year and if 15% of my credit card transactions were the tip amount for the year, that 15% of that would be in the $5000 range per year that I am paying on other peoples transactions that they want me to stay out of. One way or they other I say...

“RULES are fine.... as long as they don't apply to me!” Our industry has such a poor reputation for having so many jobs that cannot support individuals let alone families. "Nickel and diming" is a common characteristic of those of us in the industry no matter what your position. Yes... waiters can make a living well beyond a "living wage". Would it help our industry image in staff recruitment and retention by reducing the earnings potiential of the only hourly class (tipped employees) that can make a descent income? The alternative is to marginalize tipped employees' and create a new restaurant industry image: NO hourly jobs in restaurants will provide income levels that will support a person to live independently. It gets tiresome listening and arguing about tips. Owners complain about waiters who have that sense of “entitlement” when it comes to how much customers leave for a tip. But often operators suffer that same sense of “entitlement” for tips that the customers did not intend for the owners. As far as all those undeclared tips: that is a shrinking concept with the advance of technology. That has confirmed with the elevated IRS audits of restaurant books and tipped staff followed with huge fines and penalties for both! One only has to look back that the history of not declaring tips was the invention of restaurant owners. Remember the good old days when it was "understood" that the owner would never pay you more than minimum wage and reduce paid wages further with tip-credit laws? (Actually, that exists today.) The trade off was the employers would turn a blind-eye to ANY undeclared tips. In some instances, tipped employees had the choice of working off the clock at no wage just to get more floor time to earn tip income paid by the customers. It was revenue for the owners with no employment taxes. Their employees work for no wage but no taxes credited for tip income. Weren’t we all fat and happy then! The owners change the dynamics in the early 1980’s when they made “a deal with the devil”, namely the IRS, by giving up undeclared tips in exchange for keeping the deductions for business meals and entertainment dining 100% deductible. But it blew up in their faces when the clever industry leadership, lawyers, and lawmakers missed the employers’ FICA tax liability on undeclared tips. After years in the US court system and millions in attorney’s fees for the owners, both the owners and tipped employees got their butts kicked. Talk about karma! How copper wire was invented? Restaurant owners and tipped employees fighting over a penny. Like I said at the start of this post: “RULES are fine.... as long as they don't apply to me!” Paul Paz – www.WaitersWorld.com

In response to "owners only pay a few dollars an hour for wait staff" I beg to differ. If we chose to report tips ourselves, we have to pay half the ssi and medicare not to mention workeers comp on the tips. By the way, I payed out over $2000 for fees on charge tips last year.

If you as a restaurant owner really need that percentage from servers to stay afloat, then maybe you should get out of the business. Restaurant owners make their own problems. Take care of your people and they will take care of you.

I have been a server for many years, and the place I work now is actually the first place that I have ever seen practice this, and the first time I have even heard of this practice. Where I work, more than 90% of my sales are paid with plastic. I find this practice unfair for many different reasons. First of all, in the establishment where I work we do not recieve our tips in cash on a nightly basis, they are taken straight to our bi-weekly check. So on top of not 'being able to cheat the gov't out thier money' our checks are taxed, and then deducted, and then taxed more. It is my firm opinion that, not only a restaurant, but any business pay it's own bills, and not the employees.

WOW, I have never heard of this issue and now that I have, I am appalled! Really, you charge the servers for YOUR choice to accept credit cards? That in my opionion is insane, insensitive, and petty. For the record, I was a cook in the industry for 15 years, I left but hope to come back as an owner. in doing my research, I read up on credit card fees, and yes they can be expensive, but HEY, that's the cost of being in the business AS A OWNER! Customers tip for all sorts of reasons: decor, food, service. As service is the biggest part of it, yeah, the SERVERS benefit. But what will be next, charging servers for the upgrade to the decor of your restaurant to make it more inviting to customers or, WAIT, charging the cooks for the gas required or electricity needed to cook the food that brings in the customers. OMG, Please get a grip this is why we can not get good employees who want to STAY in the business!!!