Employers are liable for their share of of FICA and FUTA on tip income. So for every $100 in tip income, employers need to come up with an additional approximately $7.50 in costs.
Is there any alternative to help an employer who is stretched? They're paying higher than minimum wage already and want to do the right thing, but this little extra amount makes it difficult.
One thought I had was for the employer to withhold 7.5% of tip income as a service charge. But I'm out of ideas.
Thanks.
I know you are in California, so I assume this employer is as well. Tip income is highly regulated by the state, and if you do anything but turn it over, you go directly to jail. Well, you get the idea. You cannot even share the tips with the cooks, who work harder, longer, and have a higher skill set than the front of the house crew. When laws are written, it pays to tip the writers, I guess.
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