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Tips

Dec 12 2023
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Tax Considerations for Christmas Bonuses

By Payroll, Tips
This time of year, many employers like to reward their employees with Christmas bonuses. While this gesture is usually enthusiastically received by employees, they’re often surprised at the amount of taxes that are withheld. The IRS includes bonuses on its list of wage payments that are treated as supplemental wages instead of regular wages. Assuming that you’re not paying your employees more than $1 million each in bonuses, the withholding rate is 22%. Bonuses are…
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Aug 02 2023
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The 80/20 Tip Credit Rule Still Stands

By HR, IRS, Legal, Payroll, Tips
In July, a federal court refused to block the U.S. Department of Labor (DOL)’s “80/20 rule,” which applies to employers taking the tip credit toward their federal minimum wage obligations. The DOL rule is intended to limit the amount of non-tip producing work that a tipped employee can perform when an employer is taking a tip credit. Here is a good article on the 80/20 rule from Fisher Phillips that restaurant owners should read to…
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May 03 2023
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Tips Must Be Handled Differently Than Service Fees

By IRS, Tips
Restaurants are increasingly adding service fees to customers’ bills. However, service fees are not synonymous with tips, and employers must follow Department of Labor (DOL) regulations for distributing tips. Service Fees vs. Tips There may be instances where restaurants want to add a service fee to a guest's check at the point of sale. Examples include: Upsell fees for special menus Banquet event fees Takeout or delivery fees Bottle service or corkage charges Service fees…
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Feb 08 2023
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Tip Pooling Eligibility: Who Can Participate?

By Legal, Tips
Tips and gratuities can make up a significant portion of many workers’ earnings. In addition to restaurant workers, employees in other settings such as beauty salons, car washes and valet services routinely receive tips from customers. So, what happens to the cash tip that you handed to the person who washed your car? The business may require the employee to place the tip in a “tip pool.” What is Tip Pooling? Tip pooling is the…
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