The Shaky Marriage of the Affordable Care Act and Tips

For restaurateurs who have been distributing credit card-based tips on a daily basis to workers in cash, the buck stopped in 2015. Beginning January 1, 2016, employers with more than 50 full-time employees are now required to offer medical insurance to their employees due to the Affordable Care Act. This change dramatically alters the way tips will be paid out by many restaurant owners.While one wouldn’t ordinarily make a connection between health insurance and tips, they are now joined by circumstances.While one wouldn’t ordinarily make a connection between health insurance and tips, they are now joined by circumstances.For years, tipped employees received their earnings at the end of their daily shift. Employers would advance credit card tips out of their cash sales or petty cash, and then retain the amount submitted by the credit card company. The paychecks of the tipped employees resulted in virtually no net pay, since cash wages were absorbed by the required taxes. In fact…