User:Hengoi/Gratuity

I will put this in after the paragraph about U.S Federal Employees

Ride Sharing
In the past ride sharing companies in the U.S were against the implementation of a tipping system. Uber wanted to prioritize quick transactions through their app and and believed a tipping system would lead to an inconvenient experience for users. In 2017 Uber started its "180 days of change" to improve relations with its drivers. Part of the PR campaign included adding a tipping option to the app. The data shows that given the option to tip, close to 60% of Uber users never tip their drivers and only 1% will consistently tip their drivers. Only 16% of rides will result in the driver being tipped and the average tip amount in 2019 was $3.11.

Tipping and Discrimination
A study from 2005 showed that average tips varied depending on the race of New Haven cab drivers. The Average tip for white cab drivers was 20.3%, while black cab drivers received 12.6%, and cab drivers of other races received 12.4%. Both the study with cab drivers and another study about a southern restaurant showed that both white and black customers tipped black workers less on average than their white counterparts.

Possible Elimination of Subminimum Wage
In 2019 the U.S. House of Representatives passed a bill that would increase the minimum wage to $15 by 2025. If the bill was passed it would also eliminate the subminimum wage system. This would mean employers would have to pay their tipped workers $15 instead of the $2.13 right now. Many workers argue this would bring financial stability for many the 13% of tipped workers that live in poverty. Others workers who make a large amount of their money from tips believe the removal of a subminimum wage would lower their income from tips. The U.S. Senate is expected to vote on the bill after the the 2020 election.

I will add this next part to the paragraph about Fair Labor Standards Act

However, a report in 2012 from the Department of Labor's and Wage and Hours Division (WHD) uncovered that 84% of the 9000 restaurants they investigated disobeyed the subminimum wage system. In the end the WHD found "1,170 tip credit infractions that resulted in nearly $5.5 million in back wages."

I will add this part after the sentence about non eligible employees

I will the sentence about tip pooling

Before 2018 a tip pool could not be allocated to employers, or to employees who do not customarily and regularly receive tips. These non-eligible employees included dishwashers, cooks, chefs, and janitors. In March of 2018 an amendment was added to the Fair Labor Standards Act (FLSA) that allowed restaurants in a majority of states to split the split tips between front and back of house workers. Before this legislation passed there was concern of income inequality and the ability to pay rents between front and back of house workers. Over the span of 30 years since 1985 back of house workers in New York City restaurants had a compensation increase of about 25%. Mean while their front of house counterpoints saw an increase of 300% in compensation. In 2015 the average wage of cooking staff in New York was $10-$12, many of whom dealt with high monthly rent payments and also debt from culinary school. As seemingly low skilled front of house workers were making more money than the skilled back of house chefs, many cooks decided to switch over into. serving instead.

Employee Taxation Responsibilities
The IRS states that employees making income from tips have three main responsibilities.


 * 1) Keep a daily tip record.
 * 2) Report tips to the employer, unless less than $20.
 * 3) Report all tips on an individual income tax return.

Tips should be reported to employers by the 10th of the month after the tips were received unless the 10th ends up landing on a weekend day or a legal holiday. In that case the tips should be reported on the next available day that is not a weekend or a legal holiday. If the employee does not report the tips earned to their employer the employer will not be liable for the employer share of social security and Medicare taxes on the unreported tips. Employers will also not be liable for withholding and paying the employee's share of social security and Medicare taxes.

Employer Taxation Responsibilities
Employers that hire employees that make tips for their income have 5 main responsibilities with the IRS.


 * 1) Retain employee tip reports.
 * 2) Withhold employee income taxes.
 * 3) Withhold employee share of social security and Medicare taxes.
 * 4) Report this information to the IRS.
 * 5) Pay the employer share of social security and Medicare taxes based on the reported tip income.

Employers should distinguish between service charges and tipped income and file and report the two separately. An employer operating a large food or beverage establishment will need to file a specific Form 8027 for each establishment they operate. A business that is recognized as a large food or beverage establishment must fall into all four categories shown below:


 * 1) The food or beverage operation must be based in one of the 50 states in the United States or the District of Columbia.
 * 2) Food and beverage is served for consumption on the premises. This does not include fast food operations.
 * 3) Customers tipping employees at the food or beverage operation must be a common practice.
 * 4) In the last year the operation employed over 10 employees on a typical business day regularly.