[tyrust]

I'd rank service workers' tips counting towards their minimum wage a worse practice.

[gnicholas]

At least tips are in cash, not funny money.

[tyrust]

With this practice, your total pay is always equal to the minimum wage. You get minimum wage even if you earn no tips. In other words, the tips are worth zero to you, they just save your employer money.

[imtringued]

This is correct if you were working for door dash. Door dash deducts the tip per order. Regular restaurants deduct it monthly so if you can gather enough tips in a month to exceed minimum wage you get paid more in that month. If you earn $1000 (minimum wage in this example) and $2000 in tips for $3000 total compensation your employer takes away $1000 and you end up with $2000. There is an opportunity to earn more with tips.

However, door dash does not follow this simple model. What happens is that door dash calculates how much an order is worth, if the customer tips then it deducts the tip from the order. If your order is worth $10 and the customer tips $5 the tip will always be deducted entirely. You get paid $5 for the order and $5 for the tip. Even if you somehow manage to complete 400 orders and all of them are tipped $5 you won't get a single cent from tips even though the tips alone are enough to pay minimum wage + some. The only scenario in which you can earn money from a tip is if the tip exceeds the order's value. Someone tips $50 on a $10 order. You get $0 for the order and $50 for the tip.

When you consider that in the restaurant arrangement it's actually intended for waiters to be primarily paid by tips (at least that's how I heard it works in the US??) they'll likely exceed minimum wage and only get the minimum wage during bad months.

With door dash you're the one who's being paid for every order you complete, not the cook + rest of the restaurant. Therefore getting a tip at all actually requires a heroic effort because people are not going to tip more than the order is worth. The tips might as well not exist at all and are a pure cash grab.

The reason I'm bringing up Door Dash is that it's an example of a truly evil company vs restaurants where it's just a very unusual but fair payment arrangement.

[tyrust]

I remember hearing about this, but I think they fixed it last year [0]. Or do I not understand?

[0] - https://www.nytimes.com/2019/07/24/nyregion/doordash-tip-pol...

[thaumasiotes]

No, your tips can exceed the difference between the tipped minimum wage and the regular minimum wage, in which case you'll be making more than minimum wage. That's the norm.

[tyrust]

That's true, see my comment here: https://news.ycombinator.com/item?id=24052955

I shouldn't have said "always".

[Gibbon1]

In a few states like California there isn't a difference in the minimum wage for tipped and untipped workers.

[pests]

Unless you get more tips to push you past minimum wage.

[vincnetas]

I assume parent meant that if you do not collect enough tips to reach minimal salary, employer pays you more to reach minimal salary, but if you collect enough tips, employer adds nothing.

[pests]

I don't think so. His first statement is that with this practice, total pay is always equal to minimum wage.

But it's not, because tippers can push you past minimum wage.

[waihtis]

Not following. Don't tips go directly to the recipient without any reductions?

[tyrust]

They do, but in many states it goes towards your minimum wage. https://en.wikipedia.org/wiki/Tipped_wage

The most extreme example is in a state like Alabama where the minimum wage is $7.25 and the minimum tipped wage is $2.13 (these are the federal minimums):

   +------------+----------+----------+
   |Tips        |Wage      |Final     |
   |            |          |Wage      |
   +------------+----------+----------+
   |0           |7.25      |7.25      |
   +------------+----------+----------+
   |<5.12       |7.25-$tips|7.25      |
   |            |          |          |
   +------------+----------+----------+
   |>=5.12      |2.13      |2.13+$tips|
   |            |          |          |
   +------------+----------+----------+

So your first 5.12 (=7.25-2.13) in tips are worth nothing. Of course, you can eventually earn more than the minimum wage, in which case the tips aren't exactly worth nothing, but they are worth the value of pushing your final wage above this threshold.

[waihtis]

Thanks! By the way, I don't think "tipped wage" is at all a known concept outside of the US (for instance, I didn't know it works this way.)

[ornornor]

Don't know about US, but in Canada you're supposed to report them as income and pay taxes on them.