How do I automate and enforce tipping policies?

Companies such as those in the restaurant/hospitality industry use a POS, or point-of-sale, system to track sales, time worked, inventory, and overall management of their location.  Some also use a separate time&attendance system to manage their workforce. However, most POS systems are not integrated with an HCM system's time and/or payroll module.  See our supported POS systems.

Adding further complexity, most companies have unique tipping policies that many POS and Time and Attendance systems can't accommodate.

Examples of unique scenarios:

Tip pooling:  Front-of-house staff (i.e., servers) share their tips with each other or back-of-house staff (i.e., kitchen staff). Tips are distributed to those who earn above minimum wage, closing the gap on salary differences. 

Tip allocation:  Required by the IRS when the amount of tips reported by tipped employees for a pay period is less than a specific percentage of the company's gross receipts for that period. The amount allocated is the difference between total reported tips and the specified percent of the company's gross receipts.

Floating employees:  POS systems are very location specific and will send only employee hours, which makes it problematic for multi-location restaurants to pull it together and enforce overtime for "floating employees." 

7i Compliance:  Section 7i of the FLSA creates an overtime exemption when all three of these conditions are met:

  1. The employee is employed by a retail or service establishment.
  2. The employee's regular rate of pay exceeds one and one half times the minimum wage for every hour worked in a workweek in which any overtime hours are worked.
  3. More than half of the employee's total earnings in a "representative period" consist of "commissions."



How can IDI help?

IDI can automate your time-consuming processes!  Our Time Bank™ solution removes the need to rely on time-consuming and error prone manual calculations by importing punch detail from multiple POS systems into a Time and Attendance system.  Time Bank can also ensure that tips are allocated, or contributed, at specific rates based on rate of pay, and ensure that you are in 7i Compliance when it comes to overtime for service employees.

Punches can be automated to upload on a scheduled basis (up to ten times a day).  When Time Bank is run at the end of the pay period, it retrieves the time and labor information from the time system and associates the correct rate of pay for the employee, including tipping rules, including calculating the weekly average rate of pay used for overtime in compliance with FLSA guidelines.

With the click of a button, Time Bank reads the rates from a stored user-maintained table or from a client-provided comma-delimited file, the calculation is made, and the results are passed to payroll.

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ADDITIONAL RESOURCES:

Department of Labor

IDI Non Industry-Specific Blog