Olive Garden is changing how it tips out its servers—some aren’t happy about it.
For many people in the service industry, including servers, bartenders, and hairdressers, tips are an essential part of their income.
It often supplements measly minimum wages. And it also allows them to have cash in their pockets at the end of every work shift. That’s instead of having to wait around for a paycheck every two weeks.
Many servers and bartenders are especially drawn to this line of work because of the payment structure. So what happens when what drew them in is suddenly taken away?
Olive Garden worker speaks out
In a TikTok, lifestyle influencer Nayeli (@nayelii_i01) explained that she works at Olive Garden, and her restaurant recently announced that tipped workers will no longer get their tips at the end of their shift. Instead, it’ll be included in their paycheck.
Nayeli clarified that this change only applies to tips that are paid for on a card.
But let’s be real; less and less people carry cash nowadays. One survey found that many people don’t carry cash at all when they go out. And if they do have it on hand, it’s in small quantities.
“I’m really walking out today with $4 because that’s all I got in cash tip. Like four freaking bucks,” Nayeli said.
“I’m so mad. Like the main thing of working as a server is getting my money every single day,” she added.
Who does this new rule benefit?
A Papertrails analysis found that paying out tips daily tends to benefit employees more. Paying tips out in a paycheck tends to favor the employer.
Paying workers out in cash or through digital on-demand pay allows workers to access their earnings right away. That is a big selling point for many workers, despite the fact that they need to do their own calculations to make sure they’re saving part of their check for federal taxes. Paying out each shift often increases employee morale and retention.
Paying workers via paycheck makes it so employers don’t need to have as much cash on hand each day and makes bookkeeping easier and more precise.
Is it about taxes?
Some commenters theorized that employers may be implementing these new rules and payout methods to ensure tipped workers are paying taxes on their tips.
The thing is, they’re already supposed to report tips, including cash ones, to employers and pay taxes on them. The Internal Revenue Service (IRS) recommends tipped workers keep a daily record of cash tips so that they can accurately report them on their taxes.
Employees who earn $20 or more in tips in a calendar month are already required to report their tips to their employer so that the employer can pay their portion of the Social Security and Medicare taxes, the IRS reports.
Some senators are trying to pass the “No Tax on Tips Act” that would exclude tipped earnings from federal income tax. A study found that it’s already the case that 37% of tipped workers have low enough income that they don’t have to pay federal income tax.
What if my employer takes my tips?
An employer cannot take an employee’s tips under the federal Fair Labor Standards Act (FLSA). But they are legally allowed to reduce your payout with rules like:
Tip crediting: An employer pays tipped employees less than minimum wage. That’s as long as the employee’s total compensation meets or exceeds the minimum wage.
Tip pooling: Tipped workers pool their tips at the end of the night and distribute them among staff. Customer-facing workers, like servers, bartenders, and food runners, are commonly included in tip pools. But they can also include behind-the-scenes workers like cooks and dishwashers.
Retaining fees: Customers tip with a card, and the restaurant usually gets charged a card processing fee. Restaurants can withhold that fee from your tip.
However, if you suspect your employer is miscalculating your tip amount or purposefully taking part in it, Smithy Law Group, which primarily handles labor and employment cases, suggests speaking to an attorney.
@nayelii_i01 @Olive Garden what kind of crap is this😭 i want my daily cash. #serverproblems #fyp ♬ original sound – Nayelii_01
Commenters react
Nayeli’s video now has 22,000 views. Restaurant patrons and those who this affects are weighing in in the comments section with varying opinions.
“That’s exactly why I always tip with cash for all servers. You all should never have to wait for your $,” a person said.
“The irs is cracking down. it’s almost all serving jobs now. it’s an adjustment but it is nice to have that check,” another wrote.
“My husband is a server and it’s been years since he got cash daily from anywhere. But honestly, getting a check makes budgeting SO much easier,” a commenter shared.
The Daily Dot reached out to Nayeli for comment via email and Instagram direct message and to Olive Garden via email.
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