Tip Credit

Bussers basically have the responsibility of clearing the table, ensuring that dirty dishes are taken for cleaning and that the tables are set. A Server on the other hand ensures that a customer’s order is delivered from the kitchen to the customer’s table. Last but not least the Expo plays a role almost similar to the Server since the Expo ensures that food is organized in the kitchen and sent to the dining room. Sometimes the Expo is known as the Bartender. In carrying out their daily shores, all the three categories of staff may receive tips given by customers appreciative of the services they render. Therefore, this offsets the wages an employer is supposed to pay an employee. Instead of the employer making full payment to the employee according to the Federal Minimum wage ($ 7.25 an hour), the employee receives $ 2.13 an hour Cash Wage according to the Fair Labour Standards Act (FLSA) provided that the employee’s wage arrives at the federal minimum of $ 7.25 an hour on including tips. This difference between the Cash Wage and the Federal Minimum Wage is termed as Tip Credit.

South Fork Savings

Imagine that South Fork has an employee who is paid $ 2.13.an hour and the employee works for 40 hours in a week. The employee has been tipped $ 300 for the week. The amount that would be saved by South Fork is as broken down hereafter,

The weekly Wage        =          (Amount of hours worked x Hourly rate) + Reported Tips

                                               $ (40 x 2.13) + $ 400 = $ 485.2

Minimum Wage           =          Amount of hours worked x Federal Wage rate

                                               $ (40 x 7.25) = $ 290

Tip Credit                    =          Weekly Wages – Minimum Wage payment

                                               $ (485.2 – 290) = $195.2

Tax Credit                   =          Tip credit x FICA

                                               $ (195.2 X 7.65%) = $ 14.93

Based on the above calculations, the annual amount of money that will be saved by South Fork is $ (14.93 x 52) = $ 776.36 for each of the said employees. In the calculation above, the assumption that has been made is that all the employees receive an equal amount of tips. This, however, is not the case since more often than not it is the Bussers who cash in a small amount of money relative to what the Servers pocket. This is attributed to the fact that it is the Servers who collect the tips; therefore, the amount collected is unknown to the other beneficiaries (Expo, Busser). This money can be invested in other areas of the business in terms of boosting the quality of services provided or it can be used to expand South Fork enterprise in order to enlarge its market share. Another assumption is that all of the concerned employees will make money above the Minimum Wage of $ 2.13 and would receive a Tip Credit.

As has been stated above, the Busser receives peanuts in comparison to the Servers. The amount of Tip Credit for the Bussers as a result is higher relative to that of Servers. Subsequently, this translates to a low amount of annual Tax Credit saved by an enterprise. However, Bussers cannot be excluded from a restaurant enterprise as they are instrumental in reducing the workload shouldered by the Servers and in contributing to the image of a restaurant. To ensure the provision of quality service all day long by mitigating possibilities of burnout on the part of the Servers, Bussers are a necessity. As a result, balance should be maintained in the recruiting of restaurant employees. Generally, Tip Credits are a blessing to the restaurant business as they cushion the enterprise from the expenditures it incurs.

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