Hi all!
We’re finalizing our Square payroll, and I have a question I thought you guys might be able to help with.
Can you pay employees close to minimum wage and then ensure that with tips, they still make a set amount like $20/hr for example? Can it be set up like that? Our tips are very fair, including wages, but paying them $20/hr before tips just isn’t realistic so getting something that works for both parties is important.
Thanks!
Hi there @ShaneD1990. That is not possible. At this time, you’d have to download your time card CSV to a spreadsheet and use that to determine how much in “make up tips” you’d need to add to get your employees to your set minimum. The only thing Square does is ensure that employees make the federal/state mandated minimum wage after tips.
This is not a difficult spreadsheet to create and maintain, though you will have to manually adjust payroll each week. You can use the “Additional Pay” column to enter your “make up tips.”
I’ll add one other thing here. Since you are doing this and you aren’t paying your employees the subminimum tipped hourly wage (bravo to you for that!) you’ll want to have a discussion with your accountant. In my ice cream shop, we pay $14-$19 per hour BEFORE tips. After reviewing things with my accountant, we determined that since no tips were used to reach $7.25/hour, that we could not legally take the federal tip credit any longer — at least in my situation. That train left the station years ago, as it should have.
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