We Support HB 111
No Sales tax on mandatory gratuities • If a restaurant prints on their menu and on their bills “for parties of x or more an x% gratuity will be added” the state of Wyoming considers this a “mandatory gratuity.” • Unlike most states, Wyoming requires sales tax be collected on “mandated gratuities”. • Traditional gratuities (handwritten by the customer) are not subject to sales tax •
“Mandated gratuities,” like traditional gratuities, belong entirely to the employees that provided the service • The WLRA has met with Dan Noble from the Wyoming Department of Revenue and while the Dept. of Revenue doesn’t take a position on the bill, Mr. Noble believes this would clear up the issue and make it easier for businesses to comply. • The WLRA supports treating mandatory gratuities the same as regular gratuities-­‐not subject to sales tax. We Support HB 112
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The culture in most restaurants is for wait staff to share a small portion of the tips they received with the direct support staff that helped them earn them. Gratuities are already heavily regulated by the Federal Government (Fair Standards Labor Act) Wyoming’s antiquated system only allows tip sharing to be loosely organized by staff. (One of only three states not permitting employer involvement) Support staff includes only those directly involved in serving the customers (busser, host staff, bartenders. NOT management, kitchen staff, dishwasher) Employers are required by the IRS to track and report all tips. Under the current system compliance is nearly impossible. Employers are more successful in promoting consistent customer service when the entire service staff shares in both the responsibility of service and the reward of their team efforts. Employers are required by law to ensure that all tipped employees make at least $7.25/hr with tips and hourly wage combined each pay period. The WLRA supports legislation, permitting employers to oversee a system where servers would share a customary and reasonable portion of their tips (no more than 15% of total gratuities) with the service staff that directly assisted them. This ensures fairness for servers and support service staff. Background Service Charge A service charge IS taxable because it is a required fee assessed by the business that can be distributed any way the business desires. It is NOT restricted to the direct service staff. It can even be used for non-­‐
personnel expenses such as rental equipment necessary to serve the customer. It is always added to the sales price but is listed on a separate line. Frequently Mandatory Gratuities and Service Charges are confused.
We have defined Service Charge to provide additional clarity between the
two.
Tip Credit The ability to use tip credit for servers allows the operator to balance wages in a restaurant between the “front and back” of a restaurant and pay those in the back of the house (cooks, dishwashers, etc.) additional wages since they do not receive tips. The federal minimum wage for tipped employees ($2.13 an hour) must total minimum wage ($7.25 an hour) when tips are added. The employer must document the total income and make up any difference. Servers usually make far above the minimum wage, anywhere from $7.25 to $25 an hour. • The minimum wage for tipped employees ($2.13/hr) must total minimum wage each pay period ($7.25/hr) when tips are added. • Employers are required to track the total income of each employee and make up any difference (if any) each pay period. • A national study has shown that entry-­‐level servers make an average of $12.00/hr in tips alone with more experienced servers making even more. • The WLRA supports making no change at the state level to this law. Background Wyoming Office of Tourism Biennium budget The Wyoming Lodging and Restaurant Association understands that nearly all State Agencies have been instructed by Governor Mead to prepare for an 8% cut to their 2014 standard budget. The Wyoming Office of Tourism and director Diane Shober have made these difficult and calculated decisions in preparing a budget that reflects these cuts. The WLRA opposes any further suggested cuts that may arise as tourism and hospitality play a significant and critical role in the Wyoming economy. Highway Funding -­‐ We support the increase in fuel tax The Wyoming Lodging and Restaurant Association recognizes the need for a well-­‐maintained transportation infrastructure. In 2011 Wyoming’s roads, bridges and transit system helped bring over 8 million visitors to our state generating over $2.8 billion in spending while supporting nearly 30,000 Wyoming jobs. We support the $.10/gallon proposed fuel tax increase as one component towards investing in the future of our state’s roads and economy. We opposes a statewide lodging tax WLRA opposes a statewide lodging tax because the total sales and lodging tax on a room would be excessive. In some counties, lodging properties now charge 10% on a room when both sales and local option lodging taxes are combined. While the WLRA supports some of the initiatives that the Wyoming Game and Fish Dept. proposes to secure sustainable funding for the future, it is unfair for one industry to shoulder this burden.