Except you’re wrong. Service charges are not considered tips under FLSA rules within the US. Many states and local jurisdictions have special rules for tipped wages, how they’re taxed and those taxes are collected, and service charges are not included in that definition.
Nice reading comprehension. The TIP is a service charge. You got that backwards buddy. So a service charge and a tip is service charge x2. Or you’re admitting that a tip is only for “above and beyond thanks”, in which case it’s not mandatory and this is again a scam.
Service Charges: A compulsory charge for service, for example, 15 percent of the bill, is not considered a tip under the FLSA. Sums distributed to employees from service charges are not tips, but may be used to satisfy the employer’s minimum wage and overtime pay obligations under the FLSA.
A place implementing a service charge cannot classify it as a tip, even if it’s 100% passed onto the employee… a mandatory charge is not a tip, even if the restaurant encourages you to treat it that way. Certain states and jurisdictions tax tips differently than regular wages, and service charges are wages, not tips.
A tip is money paid directly to the worker providing the service. The restaurant can’t keep any part of it. They are not taxed on it, either as sales tax or income tax. That money is only counted as income to the worker.
This service fee was subject to sales tax. It will also be subject to income tax by the restaurant. The restaurant gets to keep as much of it as they want.
“Mandatory gratuities” are tips that the restaurant obligates the customer pay to the waitstaff. Where these are charged, you are not allowed to stiff the waitstaff. The restaurant cannot keep any part of that gratuity.
Tips/gratuities and service fees are not the same thing at all.
Except you’re wrong. Service charges are not considered tips under FLSA rules within the US. Many states and local jurisdictions have special rules for tipped wages, how they’re taxed and those taxes are collected, and service charges are not included in that definition.
https://www.dov.gov/agencies/whd/fact-sheets/15-tipped-employees-flsa
Nice reading comprehension. The TIP is a service charge. You got that backwards buddy. So a service charge and a tip is service charge x2. Or you’re admitting that a tip is only for “above and beyond thanks”, in which case it’s not mandatory and this is again a scam.
You might want to read it again
A place implementing a service charge cannot classify it as a tip, even if it’s 100% passed onto the employee… a mandatory charge is not a tip, even if the restaurant encourages you to treat it that way. Certain states and jurisdictions tax tips differently than regular wages, and service charges are wages, not tips.
A tip is money paid directly to the worker providing the service. The restaurant can’t keep any part of it. They are not taxed on it, either as sales tax or income tax. That money is only counted as income to the worker.
This service fee was subject to sales tax. It will also be subject to income tax by the restaurant. The restaurant gets to keep as much of it as they want.
“Mandatory gratuities” are tips that the restaurant obligates the customer pay to the waitstaff. Where these are charged, you are not allowed to stiff the waitstaff. The restaurant cannot keep any part of that gratuity.
Tips/gratuities and service fees are not the same thing at all.