Tips

News & Analysis as of

Employment Newsletter - April 2014: Tips, Tip Pooling and Service Charges: Developments & Guidelines

Mandatory service charges and their distribution among waitstaff have plagued the Hospitality industry for years. Federal courts interpret federal laws differently, and states have enacted their own statutes that keep...more

Disinformation And The "Tipped-Employee Minimum Wage"

A White House report promoting a substantial jump in the federal Fair Labor Standards Act's minimum wage perpetuates now-widely-disseminated propaganda about an alleged "tipped employee minimum wage" of $2.13 per...more

One “Tip” That Won’t Soon Be Forgotten

Recently, Philadelphia sports bar and restaurant chain Chickie’s & Pete’s (“C&P”) signed a consent judgment with the Department of Labor agreeing to pay current and former employees more than $6.8 million in back wages and...more

New Jersey Bill Seeks To Increase Minimum Wage For Tipped Employees

On February 27, 2014, a bill (S1595) was introduced that appears to establish an increase in the minimum wage for tipped New Jersey employees—first to 40 percent of the standard minimum wage, and then after one year, to 69...more

As if Employers Needed Another Reminder, Here Are 8.4 Million More Reasons to Get the Tip Credit Right

A couple of weeks ago, a Philadelphia based sports bar chain entered into a consent order with the U.S. Department of Labor (DOL) and filed a request with the E.D. Pennsylvania for approval of a separate settlement with...more

When Is A Tip Not A Tip?

When it’s a service charge. On June 25, 2012, the Internal Revenue Service (IRS) issued Revenue Ruling 2012-34 which provides guidance to employers and employees on the difference between tips and service charges as well as...more

Will Automatic Gratuities at Restaurants Be a Thing of the Past?

Automatic gratuities for large parties are commonplace in many restaurants, bars, and hotels throughout the country. However, as of January 2014, the Internal Revenue Service (IRS) now classifies these automatic gratuities as...more

Reminder for IRS Rule Regarding Tips and Automatic Gratuities for Your Employees!

Hospitality industry employers sometimes add an automatic gratuity to the customer’s bill, especially for large customer groups, e.g., automatic 15% to 20% for a party of six or more customers. Beginning January 2014,...more

Are You Prepared To Comply With New Employment Laws And Requirements In 2014?

The New Year brings new employment laws and requirements for businesses. For example, as reported in the most recent edition of The Fast Laner, Illinois became the last state to allow people to carry concealed firearms....more

Restaurant Industry Newsletter - January 2014

Tax Ruling Impacts the Use of Mandatory Service Charges - Executive Summary: Beginning on January 1, 2014, "mandatory gratuities" or service charges are no longer considered "tips" by the Internal Revenue Service, and...more

2014 Update for California Employers

While 2013 was marked by some novel and interesting judicial and administrative decisions, including Quicken Loans (in which the National Labor Relations Board invalidated certain common employee handbook policies), Vance v....more

New York Employers – 2013 Year in Review and Looking Ahead to 2014

“Many people look forward to the new year for a new start on old habits.” While the author to this famous New Year’s quote remains unknown, that certainly doesn’t make it any less true, including for employers. We hope that,...more

Florida's Minimum Wage Is Now $7.93

Florida's minimum wage rate increased to $7.93 effective January 1, 2014. As we reported in November, Florida's minimum wage law requires the Florida Department of Economic Opportunity to recalculate Florida's minimum wage...more

New "tipping" rules for 2014: Are you ready?

Employer practices with tips at hotels and restaurants have spawned a lot of employee discontent, class actions and other litigation. Some employers have withheld all or a portion of employee tips to cover administrative...more

New IRS Rule Affecting Hospitality Employers Takes Effect January 1, 2014

The IRS will begin enforcing a new rule concerning the taxation of automatic gratuities on January 1, 2014. Specifically, employers must start treating automatic gratuities – that is, charges that are compulsory to customers...more

Losing the Right to Cross-Examine: Anonymous Tips and Trials

Serious controversy surrounds a police officer’s right to stop, question and search a suspect based on an anonymous tip. Unless the officer observes dangerous and disruptive behavior that warrants detention, a criminal...more

Take 5 Newsletter: Wage and Hour Update - October 9, 2013

- IRS Will Begin Taxing a Restaurant's Automatic Gratuities as Service Charges Many restaurants include automatic gratuities on the checks of guests with large parties to ensure that servers get fair tips. This method...more

Serving Up Trouble: IRS Ruling on Automatic Tips

Restaurants and other employers in the hospitality industry are reminded that, as of January 2014, the Internal Revenue Service (IRS) will expect businesses to comply fully with its Revenue Ruling 2012-18. Among other things,...more

Labor & Employment E-Note - September 12, 2013

In This Issue: - A.F.L.- C.I.O. Seeks to Lure Nonunion Workers to Boost Ranks - Appeals Court Affirms Unions Can Organize Smaller Units - IRS to Begin Classifying Automatic Gratuities as Taxable Wages - More...more

Tax Law Blog: Is This the End of Automatic Gratuities?

Starting in January, the IRS will begin treating automatic gratuities as wages which are subject to payroll tax withholding. Many restaurants add the automatic gratuity to large groups to ensure the server is tipped...more

Coyote Ugly Bouncers Join the Tip-Pool Dance

A federal judge in the Middle District of Tennessee recently held that bouncers (sometimes referred to as “security guards”) at Coyote Ugly Saloons were properly permitted to participate in tip pools with bartenders,...more

It Doesn't Violate (One) Federal Law To Tip Your State Legislator In Puerto Rico

When you go to a restaurant, you have to pay for the meal - there's a quid pro quo. ...more

Employment And Labor Alert: Minnesota Supreme Court Reverses Judgment For Employer In Wage Deduction Case

Yesterday the Minnesota Supreme Court held that various restaurants/bars violated Minnesota law by making deductions from employees’ gratuities for register shortages, bills of customers who walked out without paying and...more

New York Court of Appeals Issues Opinion Addressing Tip Pool Arrangements

The New York Court of Appeals recently issued an opinion addressing Starbucks’ tip pooling practices with regard to its shift supervisors and assistant store managers, which we discussed here....more

N.Y. Court of Appeals Allows Hospitality Industry Employer Broad Discretion in Mandatory Tip Pooling

In decision that is helpful to hospitality industry employers, the New York State Court of Appeals has given restaurants and other food outlets considerable flexibility in establishing mandatory tip pooling for service staff....more

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