How Fourth Time and Attendance Helps Manage Tipped Employees

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From tip credit to tip pooling to no tipping at all, restaurant payroll is getting pretty dicey. Add the variability of the minimum wage – down to the county level in some cases – and the payroll manager’s day has become extremely complicated. With FLSA changes and the recently enacted Tip Income Protection Act of 2018, we thought it was a good time to share a rundown of all the latest Time & Attendance features that will help clarify the issue for operators.

The latest ruling, while very confusing, is clear on one thing. Employers may not keep employee tips for any reason, regardless of tip credit. According to a new federal law passed March 23, 2018, employers who keep tips from an employee receiving a tip credit can be fined $1,000 per incident and may also be subject to damages above and beyond the amounts that were improperly retained.

The Fourth Customer Care team can configure the following Time & Attendance features at your request. Just contact them or your Customer Success Manager and they will take it from there.

View Tips by Payment Type

Tips can now be configured to be broken out by cash, credit card, service charge, tip pool contribution, and total. This tip break-out is supported for Platform integrated customers with uniform job codes using Aloha, Micros, and Squirrel. This information is both visible and editable in Punch Records as well as on the tip reports as illustrated below.

The Tips & Sales Report highlights tip declaration exceptions. Available in the Above Store Console, the report offers a detailed breakdown of each team member’s sales and tips in both cash and credit along with the variance percentage. Variance between cash and credit card percentage is configured to a 4% default but can be customized at the store level.

Managing Employee Tip Shortfall

A tip shortfall occurs when employees do not make enough tips to meet the minimum wage for their location in a given work week. During the punch review process, you can now see if employees had a tip shortage during any selected work week. We offer two options for tip shortfall configuration.

  • You can automatically raise an employee’s pay to match the configured minimum wage. If this option is selected then we will expose the Allocated Tip Shortfall Report to let you know exactly which employees have been raised to minimum wage for the selected work week.
  • If your organization does not want us to automatically raise an employee’s pay due to a tip shortfall scenario, we can still expose the Sub Minimum Wage Report to make it easy to see which employees are making below minimum wage.

Both options offer easy access to the employee’s punch records in case any modifications are needed in the event that employees forgot to declare their tips.

Additional Field in Employee Hours Report

We also added the Paid Time Off hours to the Employee Hours Report, as well as the Time Card Export from the Above Store Console. This change will help track any Paid Time Off submitted via Fourth and complete payroll easily.

The Employee Acknowledge page has been updated to reflect the same fields as the punch adjustment window, changing the Pay column to Total Tips. This update enhances transparency between manager and employee regarding any pay adjustments that are made.

Variable Minimum Wage Rates

The Fair Labor Standards Act (FLSA) defines tipped employees as any worker who regularly receives more than $30 per month in tips above their base pay. The difference between minimum wage ($2.13) and the cash wage is known as the tip credit (a maximum credit of $5.12). If your employee’s tips combined with the cash wage do not equal the minimum hourly wage, the employer must make up the difference.

Many cities and states have already raised their overall minimum wages, regardless of the stagnant federal rate. Washington, D.C. took that a step further and recently voted in favor of eliminating lower tipped minimum wages. We will be on the lookout for other cities that will likely follow their lead.

Fourth Time & Attendance supports minimum wage configuration down to the county level, number of employees, or whether companies offer benefits. Our Customer Care Team is armed with current rates for each geography and can configure your settings to match, helping payroll managers feel confident in their compliance.

Keep up with all the new Time & Attendance features by subscribing to Release Notes in the Fourth Help Center. And while you are there – go ahead and create a Help Center profile (by clicking Sign In) so you can participate in our online community.

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