Tips on Pickup Orders: Who Reaps the Benefits?
When you add a tip to a pickup order, where does it go? This question often arises in the context of online food ordering services like Grubhub, where the tip may not be clear-cut.
General Practices for Tips on Pickup Orders
Typically, the tip goes to the staff who prepared your order or the person who handed it to you, depending on the establishment's policies. In some cases, if the restaurant uses a third-party service for orders, the tip may be distributed among the staff or retained by the service.
For example, if you order from a Grubhub selection, the tip usually goes to the restaurant staff who prepared and packaged your order. However, if the service involves a third party, such as a delivery driver, the tip might be split among the restaurant staff and the delivery driver, or it might be retained by the third party.
Online vs. On-Site Ordering
Sometimes, the confusion about where the tip goes is more pronounced with online orders. For instance, ordering directly from the place's website might be more straightforward. When you tip, you directly contribute to the server's or preparer's income. However, with online platforms, you might never know exactly where the tip goes.
The reason for this confusion is that online platforms handle orders differently. Grubhub, for example, does not typically disclose where the tip goes. Often, the platform takes a cut, and the restaurant staff get a portion of the remaining tip.
Federal Wage and Hour Law and Tips
According to federal wage and hour law, business owners must collect all tips, record the total at the end of the day, divide them equally among all hourly employees, and report the amount as income on the employees' W-2 forms. Tips are classified as ordinary income and are taxed like any other income.
For instance, after a busy day, the restaurant owner calculates the total tips received, divides them equally among the hourly employees, and reports the amount on their W-2 forms. This law ensures that employees receive fair compensation for their efforts.
Specifics of Tipping
Despite the clear policy on distributing tips, there can be exceptions. For example, if you pay a tip via a card for a pickup order, it might be difficult to track where the money goes. In cash, however, the recipient decides whether to keep it or share it.
Moreover, Grubhub and similar platforms often retain a cut of the tip, which means you may not be contributing directly to the server's income. It is important to understand these nuances when making a tip.
Some people advocate for encouraging or even mandating fair wages that include a living wage. Relying on tips-only compensation can be unreliable and unsustainable.
In conclusion, adding a tip to a pickup order can result in it going to the restaurant staff, the delivery driver (if applicable), or being retained by the online platform. It's essential to familiarize yourself with the specific policies of the restaurant or service you are using to ensure that you contribute fairly to the staff's compensation.