Last year I found myself in the UK for the first time, luckily I had a friend who had lived there previously with me to navigate both locations and social norms. One of the biggest cultural norms I had trouble with was the concept of was tipping. I tipped our tour guides, hotel maids, when I placed an order at the pub, etc – until she told me otherwise.
The holiday season is nearly upon us, and in the US the talk about how to tip various people in our lives is going to become omnipresent. There are articles that suggestion holiday tips for your hair stylist, newspaper delivery person, etc. This discussion also highlights the controversy over whether or not and how much one should tip, specifically when eating out.
This post is more about the latter than the former. I happened to catch an episode of ABC’s The Talk which stimulated the thought for this post. The points I heard which prompted me to post were that one speaker felt that tips are optional and all gravy for the server; another speaker had previously been a waitress and admitted that there is a low wage (currently $2.13/hour federally, states may vary) and tips are necessary to get closer to a living wage. (Note: Living wage is a whole other discussion!)
While the federal minimum wage of $7.25 is not a living wage in most areas, if you read the link above to the Department of Labor, Wage and Hour Division fact sheet, you would see that employers must pay – even wait staff – this $7.25 per hour. The catch is that tips make up the difference between $2.13 and $7.25 (and could increase their hourly wage to above $7.25.)
Note: In the case where a state minimum wage is higher than the federal minimum wage, the higher is what the employer must pay.
What I have not heard in any discussion of the topic, is that if the tips are not sufficient to meet the minimum wage (be it federal or state) then the employer must make up the difference.
For example, in Alabama (that uses the federal minimum wage) if a wait person works for 5 hours on a slow shift so they took in only $5 of tips, they don’t bring home a gross of $15.65 for the day, they bring home a gross of $36.25 (=7.25*5). Why?
(5*2.13)+5 = 15.65; 15.65/3 = 5.22/hour which is below minimum wage. Thus the employer must make up the difference between the $5.22 and $7.25 per hour.
Keep in mind, this is over a weekly basis, not daily as the example implies.
If one is familiar with commission pay structure, where there is a draw forget that as it applies to tipped employees. The amount the employer pays between earned minimum wage and federal/state minimum wage is never paid back to the employer from the employee.
So, back to the original discussion. Should you tip? Yes. Do you need to so that they can earn more than $2.13/hour – that is up to you. It is best to bring up any issues as they happen and directly, instead of being passive aggressive with tipping. But being passive aggressive won’t impact their earnings and minimum wage.
Personally, I don’t do holiday tips. I tip well at the point of service. I tip 20 or more percent depending on service, and rarely tip below that.