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Thread: Chauffeurs getting stiffed on cash gratuities

  1. #16
    Super Moderator Limo Scene's Avatar
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    I knew you even after I explained to you the business logic you would still not accept it Gunny but for me - it works and it is a single hourly rate + 15% service charge. I sub out an average of 6 to 10 runs a day all over the United States and when I get my total bill from 80% of all other companies I am throughly annoyed. Almost every single invoice I get has anywhere from four to seven line item charges including things like, "fuel surcharge", airport tax, STC, Early morning surcharge, gratuity, PUC Tax" etc. I mean, really, what is STC? If you ask ten different operators you will get ten different answers on what it is. I choose - SCREW THE CUSTOMER.

    For instance, I pay a $3.00 airport tax for every airport pickup. I don't line item it. It is in the price. I don't charge $6 for parking at the airport - it is in the price. That whole charging tax for the PUC is humorous. The PUC is not taxing the passenger. They tax limo companies and it is an overhead cost. In my pricing it is passed on in the hourly charge. So, my point is, I should get some points for that Gunny because the whole limo world is full of line item charges pushing the whole $90 an hour thing to $130 by the time it is all said and done. I have two charges. The base rate + 15% so in my opinion I offer a better, more true quote than my non-slick competitors that charge the base rate + + + and end up annoying the client.

    Again, it comes down to marketing the price, saving a boatload on Workers Comp premiums and dealing with the tax man through documentation of tips earned and paid.
    Last edited by Limo Scene; August 1st, 2009 at 08:45 PM.
    Jim A. Luff
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  2. #17

    Smile Gratuity

    Jim has an interesting system that is fair and legal and works for him. We view gratuity as a pass through item that is paid to the chauffeur in full. We don't do any retail work except that which comes through the Crescent City Trade Exchange and the Chauffeur receives an agreed upon wage that includes gratuity. With high end corporate-98% of our work the gratuity is subject to the client. Our trip sheet states the options. Either way, the gratuity is a pass through item. Our Chauffeurs are very happy with their gratuities and they make plenty of extra gratuities. Only fools & knaves cheat the service delivery folks....



    Quote Originally Posted by Limo Scene View Post
    I didn't actually believe I was going to escape without a comment from Gunny. So here goes on honest effort to more fully explain the 15% service charge I have from the front and back side with as much honesty as I can muster up.

    From a marketing standpoint, this is the bottom line - marketing professers have taught this theory since before I was born and you might have guessed, I have had my share of marketing classes over a four year period of my life. $9.99 sounds better than $10.00 to the human mind. $199 sounds better than $200. It would be simple for grocery stores to put the final price on taxable items. I mean, they know what the tax rate is and the item rate so why not just throw on the total price. You are going to pay it anyway. The reason they don't is because the lower the displayed price is, the more attractive the item/service is.

    So, this is merely one reason why I add a 15% service charge rather than just bundle it. I could just add it to the total and instead of saying that a 120' is $90.00/hr. + 15% service charge, I could just say that the total is $103.50 per hour but obviously $90 is what people hear and want to hear and it is less than $100.00 per hour and that makes the mind feel good. This is not my theory - I just learned it and applied it.

    From the consumer side, we provide the following written statement on their contract:

    A 15% service charge is automatically added to your total which allows us to fairly compensate all of our professional team members who contributed to your travel experience behind the scenes. Any gratuity provided to your chauffeur is left solely to your discretion".

    All of the money derived from the 15% service charge is passed on to various employees on their paycheck with a portion going to the chauffeur, a portion to the car prepper/detailer and a portion going to the reservationist. It appears on their paycheck stub as "gratuity".

    You already know that renumeration is mandated by federal wage order to be calculated based on hours worked. Now, try to follow me here. Worker's Comp premiums that I pay are based on WAGES earned and Gratuity is exempt from premiums. By paying my people minimum wage as far as their hourly rate, I save thousands of dollars. So, let's say I have a chauffeur and his rate of pay is $18 per hour. This is arrived at by paying him $8.00 per hour in wages and an automatic tip of $10 per hour. So, he is guaranteed $18 for every hour worked and because we tell clients that any gratuity is left to their discretion, almost all of them provide a cash tip knowing this, it boosts the chauffeur's income even more.

    Now, in the event either the employee or the company should be audited in this known "tip industry" both of us have a paper trail reporting tips collected, taxed and paid.

    Now, I hope this more fully explains why I charge a service charge, allowing me to pay my employees a higher rate of pay, fostering more money for them in the form of cash tips in addition to their guaranteed hourly wage, saving me WC premiums and covering the employee and the company on tax matters.

    But for the record, yes I would pay a 15% service charge up front at a restaurant if I could be moved to the front of the line (To Insure Prompt Service) and I could choose my own server regardless of what section I sat in as it would guarantee and pay for prompt and better service and I really don't mind that at all.

    Karl did bring up a good point about the balance as well. Some of the biggest, best tips I received left me wondering why so much was bestowed on me. I have also cleaned puke during the night and received nothing so - shit happens! At least in the way I pay, my people don't have to rely on tips for a decent income and consider the cash tips the icing on the cake.

    It works for me. It works for my people and I have mentioned before that most of my senior chauffeurs have been with me well over ten years and there are 17 other companies in the area they could go work for if it doesn't work for them.
    Dean Schuler

  3. #18
    Senior Member Cedar Mill Limousine's Avatar
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    Jim,

    I don't understand why you would be upset with the mandatory gratuity. They are basically doing the same thing as your service charge. Instead of bundling the tip with the price they are just making their price sound cheaper while still insuring the chauffeur gets a good pay. Tips are becoming a thing of the past. Everyone is too busy (lazy) to figure out percentages. It is always nice to give someone a tip that is unexpected and watch their face light up.

  4. #19
    Senior Member ADAM's Avatar
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    Gratuity/Tip Income is included in Workers Comp in Montana. There is no incentive for us to change the allocation. We also have to pay minimum wage BEFORE any Tip Income is considered. At one time Gratuity/Tip Income was not taxed for Montana Income Tax, but those days are long gone. We run all payments through the company's books and payroll so there is never any doubt about withholding, FICA, Medicare, etc. etc. It is more expensive in the short run but I can sleep with a clear conscience knowing I have done what is legal and best for my employees.
    Marc Rold
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  5. #20
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    What happens if there is a Workers comp claim. If only a portion (say 50%)of the Employees wage is subject to Workers Comp., would not that employee receive only a portion of the workers comp... Lets say a Chauffeur has an accident and is injured. He is accustomed to receiving $800.00 a week ($400.00 from actual wage and $400.00 you call a tip) I beleive he would get a percentage of his wage so he may be expecting $700.00 a week but in reality he will only receive $350.00 a week. You might have one Pissed off employee.

    I have an E-mail message into my friend at the Mich. Dept. of Labor and Economic Growth (DLEG) to find out if this is legal in Michigan. If it is , I will pass it on to my Colleagues at the GLLA and then they all can start saving a ton of money on Workers Comp.

  6. #21
    Super Moderator gunny's Avatar
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    Quote Originally Posted by Limo Scene View Post
    I knew you even after I explained to you the business logic you would still not accept it Gunny but for me - it works and it is a single hourly rate + 15% service charge. I sub out an average of 6 to 10 runs a day all over the United States and when I get my total bill from 80% of all other companies I am throughly annoyed. Almost every single invoice I get has anywhere from four to seven line item charges including things like, "fuel surcharge", airport tax, STC, Early morning surcharge, gratuity, PUC Tax" etc. I mean, really, what is STC? If you ask ten different operators you will get ten different answers on what it is. I choose - SCREW THE CUSTOMER.

    For instance, I pay a $3.00 airport tax for every airport pickup. I don't line item it. It is in the price. I don't charge $6 for parking at the airport - it is in the price. That whole charging tax for the PUC is humorous. The PUC is not taxing the passenger. They tax limo companies and it is an overhead cost. In my pricing it is passed on in the hourly charge. So, my point is, I should get some points for that Gunny because the whole limo world is full of line item charges pushing the whole $90 an hour thing to $130 by the time it is all said and done. I have two charges. The base rate + 15% so in my opinion I offer a better, more true quote than my non-slick competitors that charge the base rate + + + and end up annoying the client.

    Again, it comes down to marketing the price, saving a boatload on Workers Comp premiums and dealing with the tax man through documentation of tips earned and paid.


    I do agree +++++++ is annoying. Using the KISS principle, base + grat is the most simplistic way to price out the service or better yet, include all of the extras in one base price & sell it as "inclusive". The shopping consumer will hear base +, +, +, +, from the competitor and get a headache trying top figure out the bottom line. Grat with corporates is normally a no brainer as such is included on the billing as part of the contractual agreement. Luff is still part of the minority who mandates service charge, leaves grat as an option and pays his people a higher base pay in part predicated on levying a the service charge. If it works, it works. And in all fariness, he probably is also a minority when it comes to paying a salary that is straight out fair with his people knowing this is what they'll be making and not worrying if thy're getting screwed.
    End the Corruption. Disband the Hillsborough County Public Transportation Commission www.thefita.com

  7. #22
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    Default another question

    If you were to do the math, does the 15% service charge cover all of the payroll that is considered tip income? ( you know how thoes auditors can be) You used the example that A chauffeur makes $18.00 an hour, (basicly 45% subject to W.C. 55% is tip). Spread this over the entire staff does the 15% cover 55% of payroll? You also mentioned that you use this money to tip your support staff. Are thes people recognized by the IRS as "tipped employees"?

    Jim I like your idea but I just would like to make sure it is "bullet proff" before I would use it.

  8. #23
    Senior Member Elegant Limousines of Palm Coast's Avatar
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    What we do is no different than the restaurant do when they have a large group. Next time you go out to eat with more than 8 friends look at the check. I can almost guarantee it says 18 % tip added with large groups. So what makes it so bad if we include it.

    Airport runs corporate always want us to include it. Most people are either cheap or don't understand about tipping the chauffeur.

    Weddings all get the tip added. The Bride has enough to worry about on her wedding day. So I'm sure tipping the chauffeur isn't at the top of the list. Most brides ask us to include it.

    Nights out ,well you already know this story...

  9. #24
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    This morning a 5am run gave me and extra 10 on top of the 20 percent. They said they experienced a 45min late arrival from a local competitor and was so happy when I was there 15mins early and are vehicle was actually clean. Got to love compliments like that. Let's just say it gave me a big head for the rest of today.

    When I quote rates I give them the total without gratutiy but I do quote them 20 percent and what the total would be with it included.
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    Charles A. Kuritz
    Westfield Limousine Service Inc.
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    ckuritz@westfieldlimo.com

  10. #25
    Super Moderator Limo Scene's Avatar
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    We do add gratuity upon request. Quite common on corp and wedding runs. It us listed as gratuity on the trip sheet so the chauffeur knows. I am opposed to forced tips that are not earned. A night out should be earned. That car should have clean glassware, topped off ice wells, trash removed, fresh folded napkins and a fresh smell every time the client re-enters the car. The car better be on time and appear almost immediatley when I come out of a club. This is what I tip for. Otherwise you get paid to drive the car. It is the extras and professionalism that earns tips and I won't know that until you have delivered the service so why should I pay it. By the way, if I have a large party at a restaurant it is usually by reservation and before the bill is presented I ask to not have that added as I plan to tip much more than 18 percent. Now if service is crappy I demand the line item to be removed by the manager and detail why 18 percent is not deserved.
    Jim A. Luff
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    Limousine Scene - An Award Winning Company Since 1990
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    Limousines, Sedans, Vans, Charter Buses, Limo-Buses, Wheelchair Vans www.limousinescene.com

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