The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2008-18. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).
This Opinion Letter is a response to a request to treat itamae-sushi and teppanyaki chefs as tipped employees and thus allow them to participate in tip pools. Itamae-sushi chefs work in the bar area and prepare sushi that they serve to customers. Teppanyaki chefs prepare meals at customer tables on a teppan table and also serve the meals to the customers. Along with the itamae-sushi and teppanyaki chefs, servers, bussers, bartenders, and counter workers participate in the tip polls, while cooks and dishwashers do not. All participants regularly receive more than $30 per month in tips.
Itamae-sushi and teppanyaki chefs are more akin to counter workers who cook and serve food to customers than to typical chefs. Counter workers are allowed to share in tip pools. Since “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips” is a tipped employee, itamae-sushi and teppanyaki chefs may both participate in the tip polls and be considered tipped employees.
State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.
This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 7, social security tips.
Box 7 shows the amount of tips reported by employees. In many situations, the cash wages paid are insufficient to collect the entire amount of social security and Medicare tax. Reported tips must still be shown in this box, even if social security or Medicare tax was not withheld on them. For 2008, the combined total of Boxes 3 and 7 cannot exceed $102,000. The reported tips should be included with amounts reported in Box 1, wages, tips, other compensation and Box 5, Medicare wages and tips. Since social security benefits are based on the amount of social security tips reported to the Social Security Administration (SSA), it is important that employees periodically review their social security earnings record and provide the SSA with the Form W-2 to update any incorrectly posted earnings records.
The next topic in this continuing series will be Box 8, allocated tips. Contact Vision Payroll with any questions on the 2008 Form W-2.
According to a recent article in the Wall Street Journal, celebrity chef Wolfgang Puck would like to eliminate the minimum wage for waiters. In a story on resolutions for 2009, Puck was asked, “What problem should your industry or professional community tackle more effectively?” Puck responded:
The industry should lobby to establish a federal law that allows restaurants nationwide to exempt waiters who earn tips from the minimum wage. Waiters would not lose money because they could work overtime, and we could use the savings to provide health care or raise the wages of dishwashers.
Currently, tipped employees must be paid a minimum wage of $2.63 per hour in cash wages and with tips must earn at least $6.55 per hour. State laws may provide rules that are more beneficial to the employee and must be followed.
This is one in a continuing series on the 2008 Form W-2, Wage and Tax Statement, which employers must generally furnish to employees no later than February 2, 2009. Forms mailed on the due date are considered furnished if properly addressed. Employers unable to meet that deadline may file a request for extension of time to furnish the forms. Today we review Box 1, wages, tips, other compensation.
Box 1 shows the amount employees must enter on line 7 of Form 1040, US Individual Income Tax Return. It may be, but is not necessarily, equal to gross wages. Common adjustments that increase or decrease gross wages include the following:
- Employee elective deferral to qualified retirement plans such as §401(k) plans, SIMPLE plans, and §403(b) plans (decrease).
- Amounts withheld for non-taxable benefits elected under §125 plans (decrease).
- Taxable non-cash fringe benefits, such as personal use of company automobile (increase).
- Certain clergy housing allowances (decrease).
- Reported tips (increase).
- Expense reimbursements paid under a non-accountable plan (increase).
- Accident and health insurance premiums for so-called 2% S corporation shareholders (increase).
- Cost of group-term life insurance in excess of $50,000 (increase).
The next topic in this continuing series will be Box 2, federal income tax withheld. Contact Vision Payroll with any questions on 2008 Form W-2.