Tip Withholding allows restaurants to clearly define deductions from employee tips for benefits such as insurance, 401k, or Social Security. This improves transparency by showing employees exactly how their net tip-outs are calculated on their shift reports.
- Define specific percentage-based deductions for various employee benefit programs.
- Automatically aggregate multiple withholding policies into a single line item on employee shift reports.
IMPORTANT NOTE: Merchants who utilize this functionality should be sure to review federal and state laws relating to tip withholding to ensure compliance.
Create a Tip Withholding Configuration
1. Navigate to Settings > Payments > Tip Settings
2. Select the Withholdings tab
3. Click + Tip Withholding
4. Enter the Configuration Name (e.g., "Employee Benefits Withholding")
5. Enter the percentage to be withheld
6. Toggle on the Locations that will use this withholding
7. Click Create or Create as Inactive
Creating a configuration as Inactive allows you to save the withholding settings without applying the deduction to employee shift reports immediately, which is useful for preparing future benefit changes or staged rollouts.
Edit a Tip Withholding
Administrators can modify existing withholding configurations to adjust percentages or location availability as benefit policies evolve.
1. Navigate to Settings > Payments > Tip Settings
2. Select the Withholdings tab
3. Click the row of the configuration you wish to modify
4. Make your desired edits
5. Click Save
Deactivate a Tip Withholding
If you need to temporarily stop a withholding without deleting the configuration, use the Deactivate option. This removes the deduction from future shift reports until reactivated.
1. Navigate to Settings > Payments > Tip Settings
2. Select the Withholdings tab
3. Click the row of the configuration you wish to deactivate
4. Click Deactivate
Delete a Tip Withholding
Deleting a configuration is permanent. Use this only if the withholding policy is no longer needed and will not be used in the future.
1. Navigate to Settings > Payments > Tip Settings
2. Select the Withholdings tab
3. Click the row of the configuration you wish to delete
4. Click Delete
Sample Shift Report
Once configured, a Tip Withholding line item will appear in the Tip Out section of the Employee Shift Report. This line aggregates all active withholding policies into a single deduction, appearing immediately before the final Total Tips & Gratuity line.
Cash Gratuity will not be included in the withholding calculation.
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