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Tipped Employee - Sort Of...? Louisiana

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  • Tipped Employee - Sort Of...? Louisiana

    Good morning,

    Before posting this question, I have used the search function to see whether or not my question has been already answered. If I missed it, or if this is in the incorrect category, please advise me accordingly. Thank you.

    Background:

    I work in the hospitality industry. I work security for a hotel in Louisiana, the job I was hired to do, and make well over the minimum wage. Around January of '08, the hotel has decided that it would like to return to offering 24 hour room service. However, the hotel did not wish to hire someone for the position and has told our department that security will deliver room service during overnight hours.

    The conditions stated to us, in exchange for our department taking up this task, was that we would receive any cash tips given to us by the guest, as well as an included 20% gratuity charge on the bill, paid to us in cash by the food & beverage manager. We were told that we would not be required to pay any taxes on this income.

    From the time we began doing this, up until last week, we were not taxed for it, though we did report all tips given to us, to the company. The company has record of this.

    Last week, the company decided we should be getting taxed for this earned income (as I believed we probably should have been from the very beginning), and without any notice, verbal or written, posted our tip amounts, and we were taxed from our checks for tips earned during the last pay period.

    I have a few questions:

    1: Is this legal? Given that we are not paid any extra for doing room service as security officers, we do not receive separate checks for it. We are paid on our check for security work only, though we handle room service work during the same hours.
    2: Is this company allowed to begin taxing tips without prior notification to its employees?
    3: Do we, as employees, owe back taxes on tips received since January, since our tips were reported to the company, though we were not taxed?

    I am looking for answers, but I will also welcome any helpful websites I may research to find my own answers as well on this unique situation, as I believe we may be considered "dual job" employees. Brief research also leads me to believe we may be eligible for tax credits as tipped employees, but only for hours spend in the tipped occupation. The problem is, we do not work any separate hours in the tipped occupation.

    I welcome any help I can get on this problem, including advice on where I may do my own research into finding an answer. Until then, I will continue looking.

    Thank you,

    Hotels Guy
    Last edited by hotelsguy; 05-26-2008, 04:57 AM.

  • #2
    Yes to all three of your questions.

    Your employer's attempt to remedy the situation may be hamfisted, but they were required by law to tax the tips from the very begining.

    Since you are working "well above minimum wage" then it is likely you don't have to worry about the tip credit.

    Comment


    • #3
      Thank you very much, that does help me greatly.

      As to the third question, which received a yes answer:

      "3: Do we, as employees, owe back taxes on tips received since January, since our tips were reported to the company, though we were not taxed?"

      How do I rectify this? Who is at fault for me not having been paying the taxes that I owe? My instinct is to say me, since it is money I earned. I believe I did what I was supposed to do, in reporting all tips earned, including cash tips, to my employer. However, I do not have any documentation as to the exact amount of tips I had been earning since January, though my employer "may". The reason I say may, is because we are not allowed to fill out our own paperwork on tips received, aside from a piece of paper saying what we believed we are owed in tips.

      The regular room service staff is in charge of closing out their own tickets, printing their own receipts, and turning that in, as well as dropping any cash received into the safe. We are not permitted to do any of that, and have been told so by the Food & Beverage manager.

      What can I do from now on to keep better track of my tips? Is making copies of receipts enough? Should I be closing out my own tickets and be permitted to fill out my own paperwork?

      I apologize if the above is not an appropriate question to ask. I'm just left with various questions, the rest of which should be answered by my employer. Just looking for any further advice in order for me to ensure I am handling things correctly from my end.

      Thank you again for your previous answer, as it was very helpful to me.

      Comment


      • #4
        Are you saying you received cash tips (or tips on a credit card or charged to the room for which you received cash from the till) and didn't report them? Do it now. Income is income.

        However, just for clarification, service charges (such as the 20% "gratuity" charged for every room service order) is NOT tips, because the customer does not have a choice in having that added to the bill. The employer is not required to funnel any of that to you (although, I would opine that maybe they should). Only amounts voluntarily given are "tips".
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

        Comment


        • #5
          Oddly enough, I've never received a cash tip, for a room service order yet, by a guest intentionally. I'll try to explain as best I can. An ordinary bill will look like this:

          Turkey Sandwich: $12.00
          Delivery Charge: $3.00
          20% Gratuity: $1.60 (example)

          There are lines after that where a guest may add a tip, print and sign their name and room number. These charges are all charged to their room, and eventually their credit card, even if the guest adds any tips.

          When we finish our shift, we complete what is called a "Due Back" slip, which only requires our name, date, shift worked, and amount we are supposed to be paid, which is the included 20% gratuity, plus any extra tip written on the receipt by the guest. That's it. (There is no other forms we are to complete, even if we are given a cash tip.)

          (This is confusing to me too, don't worry)

          Now, we are paid in the following manner. We turn in a copy of the "Due Back" slip, to the morning room service attendant, who cashes out our receipts for us, when we are not present, and drops out receipts into the safe for the accounting manager. We keep a copy of this "Due Back" slip to present to the Food & Beverage manager, who pays us cash out of a petty cash drawer.

          That is the cash I meant. The only other time we may get a cash tip, is if the guest gives it to us upon delivery. If the guest pays in cash, we are instructed to take our 20% gratuity stated on the bill, plus any extra written tips, off the top before making the drop in the safe. (I don't understand that myself).

          This "Due Back" slip is the only paperwork we are permitted to fill out. I've asked, and the F+B manager refuses to allow us to take care of our own paperwork, insisting that a morning room service employee will do it for us. (Which I don't like, because it adds an element of unaccountability, especially if totals are entered wrong. I am currently addressing this with the company.)

          The 20% isn't listed as a "Service Charge" I don't believe, but I can check on that the next time I work. I'm pretty sure it's listed as a gratuity on the bill, though all of this does go on the guest's bill and eventually their credit card.

          I understand through some research I have done this morning that the company is also supposed to be extracting a credit card processing fee from our tip total as well, but I have no knowledge of this being done whatsoever.

          I hope this added information helps your understanding. It is very very confusing to me, especially since there is no written procedure or paperwork for overnight security to be doing this room service work. We were literally told "put the food on the tray, take it to the guest. You'll get any tips + the 20% in cash", however I've come to discover that that is not all that it requires, and care very deeply about giving my customers the best service I can, regardless of the fact that this is not what I was hired to do. (Which includes giving them a glass of water, and condiments, and insuring the food is fresh before delivering it. I'd never worked in a room service area before this.)



          Are you saying you received cash tips (or tips on a credit card or charged to the room for which you received cash from the till) and didn't report them? Do it now. Income is income.

          However, just for clarification, service charges (such as the 20% "gratuity" charged for every room service order) is NOT tips, because the customer does not have a choice in having that added to the bill. The employer is not required to funnel any of that to you (although, I would opine that maybe they should). Only amounts voluntarily given are "tips".



          Summary:

          If I understand your previous post correctly, any amount voluntarily added to the bill by the guest, or cash given to me as a tip, is considered a tip and should be reported. This 20%, regardless of whether or not the company gives it to me or not, is not a tip.

          The problem is, there is no tip reporting procedure or paperwork, only a "due back" slip, which we give to the manager, that includes that 20% + any tips, cash or written on the bill.

          Edit: We have been reporting any and all tips (meaning voluntarily given by guests) to the company since we have started, which they have not taxed us for. Nor have they reported this extra earned income. On our most recent check, they did report the income, including this 20% involuntary "gratuity", plus any voluntary tips, which we were taxed for. All of it. This occurs with the regular room service employees as well. They are also taxed for the involuntary 20% gratuity.
          Last edited by hotelsguy; 05-26-2008, 05:58 AM.

          Comment


          • #6
            Also, I just wanted to thank you both again for your time, energy, and thoughts in replying to my post and say that I do appreciate it very much. Your information is valued very much so, as will be any further information. Respectfully, thank you.

            Comment


            • #7
              OK, so you claim the 20% gratuity plus any additional tip that the customer may add and you are given that in cash, right? (Note my previous comment that the fixed "gratuity" does not legally have to be passed through to you; the fact that it is NOT the customer's choice to have that amount added to the bill makes it NOT tips; if the employer is passing some or all of that through to you they are doing more than the law requires). However, I am NOT saying that you don't have to report whatever portion of the service charge that may be passed through to you. You do.

              Then this is what is supposed to happen. Let's say this amount is $10. You turn in your slip and the cashier gives you $10 in cash. The employer adds $10 to your gross wages, withholds taxes on the total, then deducts $10 from your net (because you already have that cash).

              The employer CAN pass through the percentage that the credit card company charges through to you (but no more than that). They aren't required to by law. So, again, if the amount paid to you is $10 and the percentage they have to pay the card issuer is 2%, they can deduct $.20 and give you only $9.80. Of course, then $9.80 is the amount you would report.

              If you reported the cash you received in the past (whether true "tips" or a pass-through of the fixed "gratuity") and the employer has not added it into your wages and withheld taxes on it, ask them why not and when they plan on doing that, because the withholding on a retroactive amount, depending on the dollars, may be substantial.

              This company needs a new payroll person.

              Does this help at all?
              I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

              Comment


              • #8
                It helps, and it doesn't. If anything I am more confused.

                Just want to make sure I understand this correctly.

                Let's say the bill says the following:

                Turkey Sandwich: $12
                Delivery Charge: $3
                20% Delivery Charge: $3.00 (example)
                Added tip on bill by customer: $2.00

                I fill out a "Due Back" slip, and receive $5.00 cash, the added tip plus the 20%.

                That entire $5.00 is then added to my check as tips received, and thus taxed?

                Or is that 20% ($3.00) supposed to be added to my total gross income, and the $2.00 added by the customer counted as tips?

                And you're right about this payroll person. In our hotel, one person does the payroll for the entire hotel, as they have eliminated the payroll department entirely. We don't even have a human resources department where I could ask someone these types of questions. What bothers me is that they just "did this" out of nowhere, starting last week, when we've been doing this untaxed since January, and I don't understand what is supposed to be taxed and what isn't, and why. Especially why now.

                Comment


                • #9
                  If you receive $5.00 in cash, then $5.00 needs to be added to your gross wages and taxed. It doesn't make any difference whether it's a pass-through of the fixed service charge, a voluntary tip, or a combination of the two. There is absolutely no gray area here.

                  And why now? Maybe there is a NEW payroll person that actually knows the law.
                  Last edited by Pattymd; 05-26-2008, 08:09 AM.
                  I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

                  Comment

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