Daily Service Charges are now officially out of hand

[PWP-001]

20 hours ago, footzz said:

As far as thr IRS is concerned, it all comes down to the definition of a "tip" vs. "gratuity". The IRS disagrees with most dictionaries and encyclopedias definitions of the term "gratuity." Most resources define gratuity as a "tip" or "payment for services beyond an advertised fee." The difference, according to the IRS, is that a tip is a payment offered directly to a worker and in no way processed or taxed by the employer. A gratuity is a payment provided to the employee that has been collected, allocated, reported and distributed by the employer. Simply put, tips are cash-in-hand that must be reported by employees, and gratuities are included in paychecks and accounted for by employers.

 

THIS IS NOT CORRECT.

 

Employees who hold a position where it is usual and customary to receive tips/gratuities from guests are required to report those tips to their employer.  The amount of those tips are included in the employee's W-2 in box 1 as earned income, which is subject to INCOME TAX.  Additionally, both the employer and employee are each also obligated to pay social security tax of 6.2% and medicare tax 1.45%, subject to annual thresholds.

 

Whenever a gratuity, tip or service charge is automatically added and mandatory, that amount imposed is also subject to STATE SALES TAX (in many states) which is paid by the guest.  When that is distributed, the actual amount --which could be less-- that is given to employees is also subject to income tax and FICA (Social Security and Medicare Tax)

 

Common practice is for guests to leave a "tip/gratuity" when they pay by credit card.  The employer is very much involved in that transaction, given the employer pays out that tip in cash to the employee usually the same day.  It still is subject to income taxation, through tip reporting.

 

Add a line to a check and call it "a little something-something" and despite the name, the IRS for income tax purposes considers it earned income and subject to the taxes described about.  

 

The mandatory nature determines application of state sales tax, despite what name is used.

 

Lastly, because someone is going to bring it up....   In foodservice establishments, if ALL of the tips/gratuities REPORTED by tipped employees ARE LESS THAN 8% of total sales where customers would normally tip, then the employer is responsible for allocating that shortfall (using an IRS formula) to those tipped employees, reporting it in Box 8 on the W-2 labeled Allocated Tips.  This is taxable income to the employee.  It's also can be considered a red flag or for an audit of unreported income.

 

Thankfully none of that applies cruise line employees who certainly are not subject to USA employment/wage & labor standards.

 

One source:  https://www.irs.gov/pub/irs-news/FS-15-08.pdf

 

 

 

[mek]

1 hour ago, Ret MP said:

I didn't say anything about anybody making less $$ just because anyone paid less for a cabin.  All the gratuities are put into a large bucket (figuratively speaking) and then divided up amongst the various recipients.  Take the sum of all the on-board gratuity and divide it up as they do now, which I don't know the breakdown and don't care. 

 

I never reduce or remove my prepaid gratuities and I also tip everyone that brings me a drink, serves me a meal, and/or provides a service for me and I have direct contact with.  

I never reduce or remove tips, give extra at the end of the cruise to those who directly provide a service to me, and always give a cash tip for each of my voucher drinks, but personally think pooling tips is a bad idea.  It assumes everyone provides the same level of service, which is definitely not the case.

[FamilyCruiserUK]

So back to the OP, at what amount of daily grats do people feel would make them think about other cruise lines or stop cruising? 

25 

30 

40

Etc.....

[Ret MP]

1 minute ago, mek said:

I never reduce or remove tips, give extra at the end of the cruise to those who directly provide a service to me, and always give a cash tip for each of my voucher drinks, but personally think pooling tips is a bad idea.  It assumes everyone provides the same level of service, which is definitely not the case.

Agreed.  But, the present system, as far as I know, does the same and going to a % system wouldn't change that just make it more equitable for the guests and give cost of living raises, almost in real time to the crew.  On the other hand, where countries don't allow tipping or it is not customary, everyone makes the same no matter how good or how bad the service they provide.  Where tipping is allowed or customary, if I don't think I received a level of service that I think it should be, I leave less or none.  That's a wake-up call to the person providing the service and incentive to do better or be a little more consistent. 

[Ocean Boy]

1 hour ago, Ret MP said:

  Where tipping is allowed or customary, if I don't think I received a level of service that I think it should be, I leave less or none.  That's a wake-up call to the person providing the service and incentive to do better or be a little more consistent. 

Isn't that a problem with auto-gratuities though? Say your cabin steward does a really poor job. If you reduce the auto-gratuities then the entire service team suffers. No one knows why they were reduced or who caused the reduction. So the action isn't likely to be a learning experience for anyone.

[Ret MP]

1 minute ago, Ocean Boy said:

Isn't that a problem with auto-gratuities though? Say your cabin steward does a really poor job. If you reduce the auto-gratuities then the entire service team suffers. No one knows why they were reduced or who caused the reduction. So the action isn't likely to be a learning experience for anyone.

Agreed!  However, like I've said in other post, no system is perfect and I never reduce my pre-paid gratuities.  How do I combat poor service and my tipping?  As stated, I tip extra for people that do face to face services with/for me, if deserved.  So, the server in Chops that give me great service tonight gets an extra $10.00 or $20.00 ~.  The server in Chops gave me bad service last night and didn't get an extra tip or reduced tip.  This server tonight got a great extra tip and he/she probably told the server from last night and knows why the server from last night didn't get a tip or reduced tip, they know who works hard and who doesn't, I'm sure.  That's for servers, stewards are a different story.  I actually tell them that I didn't reduce the pre-paid gratuities but my extra tip was/is reduced or none at all and explain why?  Being retired Army and Law Enforcement, I have no problem telling people where they stand with me and why I do things.  

[Donsyb]

2 hours ago, FamilyCruiserUK said:

So back to the OP, at what amount of daily grats do people feel would make them think about other cruise lines or stop cruising? 

25 

30 

40

Etc.....

It depends on the overall cost of the cruise for me, regardless of the split between fare and gratuities. I don’t care how it’s broken down, I just care about the total cost.

[goldfish65]

One small correction I believe to the long post at the top of the page....nowadays, most commonly, credit card tips go on the employee's paycheck....true at one time, we got our tips every night but that changed some time ago. Streamlined the process. 

 

Also my $.02 on tip pools...you may have some team members underperforming because they know they'll still get the same paycheck...but often that person gets some serious peer pressure and scrutiny...in my experience, with a tip pool, we all work together and help one another. 

[nelblu]

5 hours ago, Ocean Boy said:

I think this is a perfect example of how a gratuity based system is far more complicated than a salary based system.🙂

Unfortunately, it's human nature that make everything complicated.  How complex of a system is $16 grats (x suites) pd/pp.

[Ocean Boy]

22 minutes ago, nelblu said:

Unfortunately, it's human nature that make everything complicated.  How complex of a system is $16 grats (x suites) pd/pp.

Math is not complicated.  And you know what is even less complicated.... I agree to pay RCI a certain amount of money to sail on their ship and they compensate their employees. That is really simple. Then you don't even have to know how to do math.

[Longford]

18 minutes ago, Ocean Boy said:

Math is not complicated. Did you read the post I quoted or not? And you know what is even less complicated.... I agree to pay RCI a certain amount of money to sail on their ship and they compensate their employees. That is really simple.

Obviously, the cruise lines transfer some of their employee pay obligations to ship guests.  Not different from what USA restaurants push us to supplement meal prices by 20%, to supplement the low wages they pay their workers.

[Ret MP]

5 minutes ago, Longford said:

Obviously, the cruise lines transfer some of their employee pay obligations to ship guests.  Not different from what USA restaurants push us to supplement meal prices by 20%, to supplement the low wages they pay their workers.

If you work as a server at a Waffle House, yes you are working for low wages.  Cost of meal is low and thus the tip is low, even at 20%.  However, if you work at Ruth's Chris, at 20% and a good location, you are making a very good wage.  And let's be honest, I'd bet that the vast majority of cash tips aren't reported to the IRS, at least a good percentage of them aren't.  

 

One more thing I try to do to advantage the employee/server is I try to make sure I have enough cash on hand to pay my tip in cash, hard to do anymore as I don't usually carry cash.  I've heard (meaning I don't know this for sure) that tips are reduce by the % that the business is charged for charge cards, called the discount rate.  That could be anywhere between ~3 - 5% of the tip reduced.  Other reasons, too, but I won't get into that here.   

 

I do believe in our system here in the U.S.A. Good service/servers get good pay.  Bad service/servers don't.  Being a retired member of the Corporate team of a very large parking management company, I know that the hustlers at an upscale hotel valet make a very good wage, especially for entry level employment folks.  Those that don't hustle usually don't last for more than a week or two.

 

JMHO 

[bonsai3s]

Happy to be cruising. I am saying this humbly and quietly...

 

My first job was as a paperboy delivering the San Francisco Chronicle/Examiner newspaper...in 1967. At the end of each month, I would knock at every door and say politely "paperboy, collecting".

 

For tips, I usually received a quarter...sometimes 50 cents...when a customer gives me a dollar, I was forever grateful.

 

As a young kid, I learned the value of money...so I saved every penny. When I got a bit older, I used that money to buy Chrysler stocks. Everyone told me I was stupid...Chrysler was going bankrupt.

 

I was stupid and stubborn. I bought 100 shares of Chrysler stocks for myself and gifted my dad a 100 shares.

 

Chrysler Corp. hired a guy named Lee Iaccoca...who turned the company around.  The stocks doubled, tripled, quadrupled...split...and the company became Chrysler-Benz.

 

Fast forward a few years..the proceeds from my shares gave me enough money to buy my first house.

 

Fast forward to now...happy, retired, and when I tip, it has a very special meaning. Happy to be cruising.

[Pellaz]

On 12/8/2022 at 10:11 AM, not-enough-cruising said:

All cruise lines pay their crew the same way, it is regulated by international convention. There is a guarantee minimum that must be paid per

month, regardless of gratuity or service charges. The current minimum is $(1200  or 658)USD per month, which is very suitable considering the economic climate most of the workers come from. 

 

Also need to add:   free room and board, free medical for the crew, and the cruise line pays for crew repatriation to their home country.  Not sure about RCCL, but on CCL if a crewmember opts to stay in the U.S. between contracts, they are paid the equivalent of what the air travel would have cost. 

 

 

On 12/8/2022 at 2:01 PM, FamilyCruiserUK said:

Also how much money is the crew charged for board and lodgings on the ship? 

Crew are not charged for room and board while on ship.  

The menu in the crew dining room might be better than the passengers'.  It rotates every 28 days aboard CCL ships, as opposed to every 8 days for passengers.  

Crew ARE charged for access to wi-fi, but get a discount.  

 

 

[mpdog42]

15 hours ago, Ret MP said:

 

Being retired Army and Law Enforcement, I have no problem telling people where they stand with me and why I do things.  

Exactly....and" that's a rates four snaps for a M and a P" .....(Think..In Living Color )...."I am Blane Edwards..and am Anton Merryweather"....

[cube1982]

Everyone arguing about this is so comical. Fact is the service has gone down and the gratuities have gone up. (and they may go down even further if the once a day room cleaning starts) No way am I paying $450 for "gratuities" …..if anything the gratuities should be lowered. I swear this is the only industry people "worry" about the employees. Do you worry about the McDonalds employees pay, or the furniture store employees pay, or even Walmart employees pay? no, you don't......it boils down to I'm the consumer and its not my responsibility to make up the difference in pay. sorry not sorry.

[FamilyCruiserUK]

3 hours ago, Pellaz said:

 

Also need to add:   free room and board, free medical for the crew, and the cruise line pays for crew repatriation to their home country.  Not sure about RCCL, but on CCL if a crewmember opts to stay in the U.S. between contracts, they are paid the equivalent of what the air travel would have cost. 

 

 

Crew are not charged for room and board while on ship.  

The menu in the crew dining room might be better than the passengers'.  It rotates every 28 days aboard CCL ships, as opposed to every 8 days for passengers.  

Crew ARE charged for access to wi-fi, but get a discount.  

 

 

So not having to pay for their rooms or for utilities, gas elec, water etc, free medical, possible free food, i would say the crew have more disposable income then most people. Their outgoings are far less then someone paid the equivalent wage or more on shore who has to pay all of the above. 

I know they work hard and i know they are away from families but still a good wage when you have very little essential outgoings on board. 

 

 

Edited December 12, 2022 by FamilyCruiserUK

[DirtyDawg]

14 hours ago, Ocean Boy said:

Math is not complicated.  And you know what is even less complicated.... I agree to pay RCI a certain amount of money to sail on their ship and they compensate their employees. That is really simple. Then you don't even have to know how to do math.

What's the process for removing the auto -tips? Can someone call Guest Services or do they have to go there in person?

[Biker19]

2 minutes ago, DirtyDawg said:

Can someone call Guest Services or do they have to go there in person?

Either should work.

[Ocean Boy]

7 minutes ago, DirtyDawg said:

What's the process for removing the auto -tips? Can someone call Guest Services or do they have to go there in person?

Don't know, I've never done it...yet.

[DirtyDawg]

1 minute ago, Ocean Boy said:

Don't know, I've never done it...yet.

I'm the same as you, never bothered in the past but in the future ...  maybe.  

[DirtyDawg]

8 minutes ago, Biker19 said:

Either should work.

Thanks,

I try to avoid those lineups at guest services like the plague.  Although I once found a chair within hear-shot of the G.S. desk on a rainy afternoon and was thoroughly entertained. 😉

[Ocean Boy]

14 hours ago, Longford said:

Obviously, the cruise lines transfer some of their employee pay obligations to ship guests.  Not different from what USA restaurants push us to supplement meal prices by 20%, to supplement the low wages they pay their workers.

Yes, the cruise lines like the American tipping system. They just don't like American labor laws or tax system. I wish I had the ability to piecemeal a system like they do.

[A&L_Ont]

On 12/11/2022 at 12:41 AM, Ret MP said:

 

I don't know why cruise lines can't charge gratuities as a percentage of your cruise fare.  As stated in at least one other post, if you pay a fixed rate no matter what class, category, cabin you paid for, the less expensive cabins pay a much higher percentage of gratuity than the more expensive cabins.  20% of your cruise fare doesn't sound unreasonable to me.  As one that usually cruises Star Class (not bragging, just fact), I don't mind paying a little extra for gratuities (which I already do).  But, I don't think the policy of making the prepaid gratuities or making changes onboard optional should be changed.

I’m trying to understand your suggestion above.
 

First off Star Class gratuities are “included”.😉  In reality they are rolled into your cabin cost, as we know they aren’t free.  Trying to add that will not go over well. 

 

Under your proposed suggestion of 20% gratuities a Star Class cabin at $15K for a week would then be charged an additional $3k in tips just for their stewards, MDR room staff, and behind the scenes staff as per normal breakout of tips. Then add tax to that cruise cost increase.  As a regular Star Class guest you also know that is a cabin deal at todays prices. Some regular suites are almost that price. Do you think these services will have improved with that 20% addition?
 

This doesn’t include the Genie tip, specialty dining staff, bartenders along the way etc… that one wishes to tip over and above. How much would you propose the Genie gets in cash if the regular staff get $3k? 
 

At these rates we are beyond mass market cruise lines and closer to the Ritz Carlton yachts, or a private yacht over a cabin on deck 17. 
 

 

 

[blueslily]

On 12/8/2022 at 9:08 AM, gumshoe958 said:

NCL have also started charging for room service continental breakfast this week. Let’s see if Royal does the same.

 

Face it, prices everywhere are rising fast. Cruise lines aren’t immune. We’ve already seen Royal trial cuts to MDR menus and cabin cleaning. I doubt very much that’s the end of it. I would guess every department’s been told to make savings and they’re starting to filter through to the passenger experience.

 

On Symphony now, MDR dinner menu does include the classics and cabin cleaning service is twice per day. I guess people have different experiences. I've seen people make comments on here about reductions in bith, but my experience right now is different. Happy sailing everyone.