It is my opinion that it is morally wrong, but it is not that simple. Let’s try this a different way:
If drivers were eliminated from tip credit would that force you out of business? Is your business so fundamentally mismanaged that you cannot pay your drivers MW? If the answers to both of those questions are no, then what is the purpose of tip credit at YOUR store?
If drivers were eliminated from tip credit would that force me out of business? Probably not, but I really don’t know. I’d have to raise my prices or my delivery charge. I can’t forecast the consequences of that, but I do not think it would be good.
Is my business so fundamentally mismanaged that I cannot pay my drivers MW? Of course not. As I’ve said over and over again, my drivers are making minimum wage and more. I’m absolutely certain that if I were violating the FLSA with regard to not paying MW, I’d have heard about it from the feds by now. But you aren’t going to like that answer are you? Because you have a different idea of what MW is vs. what the FLSA says minimum wage is. And that, my friend, is an issue you need to deal with.
I’m sorry, I didn’t answer you last question - What is the purpose of tip-credit at my store?
Well, I’m not sure it specifically has a purpose. There are laws that tell me how much I must pay each employee. I follow those laws. If I decide to pay someone more than those laws require, I am free to do so, and I do. When I do that, it is money straight out of my pocket.
Now, the reasons I do that (take money out of my pocket to pay people more than the law requires) vary - but it is usually because the market for that employee demands that I pay a certain amount. For example, I pay a GM more the the law requires because if I didn’t, they would work somewhere else. If I could pay a GM MW and put the difference in my pocket, of course I would! That’s why I’m in business. But the market says that a GM makes more than MW.
Now, it is obvious to me that the market does NOT say that a driver is worth more than I am currently paying. Otherwise, I would have no drivers working for me. So, seeing that I’m in business to make money - why would I take money from my own pocket to pay someone more than the market requires? That doesn’t make good business sense to me.
Here we get straight down to the bottom line of all the hissing and spitting and arguing. All business owners, employees, vendors, utility companies, repairmen, marketing firms are in the business world to earn money. No one would show up for work if it weren’t about trading money for their time and efforts.
Business owners open and operate businesses for the primary goal of realizing profit. Everything else takes a back seat to profitability ans sutainability. Without those, the whole house of cards falls apart. Everyone else is trying everything they can to acquire/obtain some of that money from business owners.
I bring to the business several things: ability to secure funds in excess of $500K to build and start a business; skill in developing a marketing strategy; credit rating; business market reputation for stability and professionalism; management skills; crazy cooking and product development knowledge and abilities; willingness to mortgage my life to run a business; acceptance of any and all liability for the business actions of my staff and my business entity; leadership ability that attracts and motivates employees; vast network of professionals with whom I can consult and trouble-shoot issues.
My employees are fine people whom I would do nearly anything for . . . but bring less to the bargaining table when it’s time to split up money. When they increase what they bring to the table, then they get more money. If I can find an acceptable market-priced employee for the legal minimum wage, and an employee making more does not prove his value for that wage . . . then prudent business practice says replace the underperforming asset.
Morals and “fairness” don’t really ever enter into it from where I sit. If everyone knowes the score when the employment agreement is struck . . . everyone knows the wage and compensation FROM DAY ONE . . . then there is an ethical and legal contract since everyone gave informed consent. No bait and switch, no secretly changing the wages and paying you less than agreed. Unless an employee somehow convinced thelmselves that the wage was just a joke and was really higher than what was told . … then you get into an employee paying his “Fool’s Tax” Just like us owners often do [size=2] (paying adear price for not understanding and knowing the real costs and benefits before committing . … often leading to unfortunately large consequences)[/size]. Renegotiation after the fact is a different game altogether. Employee can ask for more money and see if the business agrees to the new arrangement . . . but that is a business decision that doea not bring in “fair” or “moral” either. Heaven help the business that tries to renegotiate a LOWER wage tha agreed. See, this is not at all an equal power negotiation. But, it is about businesses protecting profitability and sustainability as relates to productivity and loyalty of personnel assets.
Can you verify whether or not you are a franchisee of Papa John’s or Domino’s? You do not have to specify which one, but I am smelling a rat here. I just don’t think indies have GM’s :lol:
No, I am not a franchisee of PJ, Domino’s or Pizza Hut. I am, however, a franchisee of a system in the top 15. We have 6 stores in our group.
Yeah I figured you were a franchise kinda guy. Even though mine does not, in general most indies respect their employees more than bigger chains. And respect is including, but not limited to, wages.
This may startle you Mr. Guest, but I actually was a GM for a top 3, and drove for them before that. I hope that you do not treat your people (in a non wage-related way) as bad as they do. I actually have worked as a driver for two of the “Big 3”. What a nightmare. :shock:
No, I’m not shocked that you worked for a top 3.
I have no experience with them, so I don’t really know how they treat their people. I treat my people the way I’d want to be treated. With care and respect. I’ve gone far out of my way to help my employees over the years, and I’m happy to do so.
True indie’s around here may or may not “respect” their employees more with regard to wages - in fact, I know for sure a few of them pay an hourly wage above MW. But guess what? The only reason I know that is because their drivers come to me looking for a job because - you guessed it - they aren’t making any money taking 1 delivery an hour even if they are making $2 more an hour in wages than I’d pay them. I, in essence, am providing value for that lesser wage - more deliveries thus more income.
See, even drivers are in it for the money. They leave the employer who “respects” them more by paying above MW because of money. And that makes sense to me.
You actually do not sound that bad to work for. From a driver’s perspective, the busier the better. I just cannot get over the sub-minimum issue. I will concede this much: if you can get away with it (via the law) it makes sense to use it to have a higher profit. Like it or not, it is a moral issue. It just makes me sick that it has to be done at the driver’s expense. Wages have gone nowhere in a decade plus for drivers, while car maitenance and gas have obviously seen inflation.
Man, I feel like we need a group hug… 
Not to beat a dead horse, but there is one more reason why I don’t think this is a moral issue - and it’s because MW is an arbitrary number mandated by the government. IMO, morals have nothing to do with decisions made by the government.
I understand you point about it being at the drivers expense. But no one really knows if that is true or not. As I said above, if I paid MW it might put me out of business. That would not help the drivers. If I paid MW and raised my prices to cover it, I might lose customers and the driver might lose 1 delivery per hour - and end up making less money. If I paid MW and raised my delivery charge the same thing could happen.
But we could never know unless we tried it. It’s all a balancing act, and changing one thing changes everything else - maybe for the better, or maybe for worse.
It really is possible that by paying my drivers using tip-credit that they are actually making more money, more income, than if I paid them without using tip-credit. And I think you’d agree with that possibility.
that’s quite funny as we’ve had more examples on this site of indie’s paying under the table, not having insurance etc.
Your issues (yes you have issues) seem to be:
In my 20+ years in business I’ve seen good guys and bad guys in all walks of life and types of business and its the same here in the pizza business. There are good indies, and bad ones (and some of the bad ones are shocking). There are good and bad franchises (and some of them will be shocking too) although some of the major problems get removed by being part of a system. Show me a big 3 or franchises that doesn’t have non-owned insurance for example!
To be honest my issue with you is that you come to a forum such as this and give us guys a hard time as we ‘represent the bad guys’ in your eyes. You’ve lectured us about tip credit when only one person on here so far is using it and the vast majority don’t. The guys who frankly don’t give a sh*t about their staff aren’t really going to be spending time on this kind of forum sharing ideas with other operators are they??? Sure some do come on here with ‘oops got caught with no insurance what do I do’ but they don’t stick around as they also get a hard time from us as well.
So know that you’ve realised that we’re all not ‘bad guys’ perhaps you’d either ease off on your moral crusade or move on to a forum where the ‘bad guys’ frequent.
We average 3.7 pizza driver collar bombs every 4 days where I live, so the drivers are compensated in accordance with the inherent risks…minimum wage + 25 cents + tips.