How New IRS Rules For Auto Gratuity Works For Groups


Hi everyone,
There’s been a lot of confusion about this subject but I’ve got info from an expert to break it down.
PJ Calihan is the business development & hospitality associate at HRI.

HRI specializes in providing human resource, employment and safety solutions to meet the needs of restaurants and hospitality businesses.
They help protect their clients’ businesses by effectively reducing their liability risks that are inherent in hospitality operations.

One such way includes keeping their clients informed and compliant with new laws and updates to existing regulations, including the new IRS standing on auto-gratuities as service charges…

PJ Calihan Says,
"Here is a sample calculation if an auto gratuity is applied to a party:

3 hours on general floor, 6 hours at special event = total of 9 hours
(8 hours - straight pay; 1 hour OT)

Pay for 3 hours general floor work: $8/hour X 3 hours = $24.00

Pay for 5 hours special event work: $25/hour X 5 hours = $125.00
Overtime Rate: $27.94/hour X 1 hour = $27.94
Total Due = $176.94

Overtime Rate Calculation
Total value of daily pay:

Pay for 3 hours general floor work: $8/hour X 3 hours = $24.00
Pay for 5 hours special event work: $25/hour X 5 hours = $125.00
Daily Regular Pay = $149.00

Divide daily rate of pay by # of hours worked: $149/8 = $18.63/hour

Multiply by 1.5 to get the overtime rate: $18.63 X 1.5 = $27.94

Overtime = $27.94/hour

I hope that helps.”

Ask questions below in Comments or
contact PJ Calihan at...

Founder of T.G.I. Friday's, Inc. Says,
"I highly recommend Scott's book... Scott's tips will save you years
of trial and error and will put you in the money from the start."   Daniel R. Scoggin

Scott Young -
Author of eBook - 199 Ways To Increase Your Tips  
Only $9.99 ( Over 300 Pages )

Founder of
(20 Years, Creator of 25 Bar Tender DVD's, Flair Classes At Your Bar )