Luxury Coach & Transportation

March 2016

Magazine for the professional limousine, charter and tour industry.

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58 LIMOUSINE, CHARTER & TOUR MARCH 2016 WWW.LCTMAG.COM GRATUITIES HAVE ALWAYS HAD A SOLID presence in the transportation industry from cabbies to chauffeurs and bus drivers. It is rumored that to offer someone "tips" was an act To Insure Prompt Ser- vice, or TIPS, as it became known. It was intended to reward exceptional service rather than be a compulsory payment. Today, people wonder if it is appro- priate to tip everyone, from the gardener to the mattress delivery team. You would never tip your Starbucks Barista in Eng- land nor would you tip a cabbie. Yet, in the U.S. even fast food counters have obvious tip jars begging you to up the employee's pay for the day. The New Concept Danny Meyers, a popular restaurateur in New York City, decided to forbid patrons from tipping his wait staff. He instead raised the prices on his menu and began paying his employees top wages with health care benefts. Joe's Crab Shack, a national seafood chain, followed suit, raising its employee wages to $14 per hour and requested guests to refrain from tipping. Other companies outside of the res- taurant industry forbid tipping employ- ees, such as Albertson's Grocery Stores, a Boise-based chain. If a clerk helps you carry groceries to your car, he is not al- lowed to accept a tip. Limousine Industry BostonCoach has long maintained a no tipping policy, even stating it on its web- site and in literature provided to new corporate clients. A direct statement says, "Remember our no tipping policy." My former company, Limousine Scene in Bakersfeld, Calif., eliminated mandatory gratuities six years ago in favor of a start- ing wage of $12 per hour when the mini- mum hourly wage was $6.75. Clients are free to tip their chauffeurs at the end of rides. Many transportation companies have implemented a "service charge fee" and pass on only a portion of the amount collected. While complete- ly legal, it may deceive the client, who falsely believes the entire amount goes to the person providing the service. Is Tipping a Thing of The Past? By Jim A. Luf, LCT contributing editor On the other hand, if an operator passes on a portion of this service charge and the client doesn't understand the dif- ference between a gratuity and a service charge, the driver may get a double dip. Are Tips Fair? Do tips really cause employees to work harder and deliver better service? Cus- tomers can use it as a weapon to punish a person for providing bad service. If an employee relies primarily on tips rather than wages, he can be fnancially penal- ized for a mechanical failure. An angry client can withhold a tip as a result of a service failure. Likewise, is it fair to force your client to pay a 20% gratuity before your chauf- feur has even rolled out of bed in the morning? Suppose he is late, picks up the client in a dirty vehicle, and gets lost? Why should a client be forced to pay what was intended to be a gift? Yes, that's right, the dictionary says, a gratuity is a gift. It's not really a gift when it is forced upon a customer. Fairness The IRS ruled in June 2013 there is a distinct difference between a service charge and a gratuity charged to a cus- tomer. A service charge is a non-ne- gotiable charge forced upon the client and collected by and for the business. A gratuity is an amount decided solely by the customer and can be any dol- lar amount or percentage the customer decides to pay. If you are collecting an amount des- ignated and presented to the customer as a gratuity, the entire amount deter- mined by the customer must be paid to the chauffeur. The employer cannot keep any part of it. While this ruling applies to tax and tip matters, keeping any part of an employee tip violates the Federal Labor Standard Act. At the end of the day, your policy should refect your values and your bottom line. Each approach, tips or no tips with higher wages, has its pros and cons. Make sure you check with your employees, your clients and your spreadsheets to see what refects best on your company. Smooth Operations provides a broad range of information focused on new ideas and approaches in management, human resources, customer service, marketing, networking and technology. Have something to share or would like covered? You can reach LCT contributing editor and California operator JIM LUFF at Jim@LCTmag.com. SMOOTH OPERATIONS I MARCH 2016 What started with a trendy restaurant in New York abolishing tips may be the start of a new culture as other businesses follow. Tipping Point?

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