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his files. For the purpose of paying premiums on workmen's compensation, he has got to know the approximate tips of the employee, because, when the employee is injured he is not paid on his salary alone, but he is paid on his entire earning power, which is salary and tips plus meals that he does not receive when he is injured. So he has that already. His premium for workmen's compensation is based on that.
Then, again, he has it for the purpose of unemployment insurance. When one of our people is unemployed, he does not just get the twothirds, or whatever it is, of the salary. He receives it on all of his earnings-tips and salary. So he already has that in two instances.
Then again the Treasury Department comes along to the employer and wants to simplify its work. And they would like to know, for example, what the waiters or waitresses in a certain hotel make in tips. So he obtains it from them. And he has that.
So in three cases he already has now in his files the approximate earnings in tips of the employees. And then, if that doesn't satisfy him, it is a simple matter for any hotel or restaurant man to take the checks for any one day of a waiter or a waitress, or the amount of calls the bellboys had to the rooms, and they can come to a pretty fair idea of what the employee has made in tips.
Senator Hory. I was just asking you about your opinion about it, Mr. Sands. I understand what you say, and what these others could do, but I was asking you, from your observation, approximately what salary is paid to the average waiter in Washington, for example, in Washington today, and how much he gets in tips.
Mr. SANDS. That varies in the various houses.
Mr. Sands. It would be unfair to average it, Senator, for the reason that here is a waiter who may work in some place on the side street, and he may make 50 cents a day in tips; and then again another waiter in another place may make $5 or $4. It goes with the class of the establishment and the clientele of the establishment. For instance, I had lunch the other day in the Carlton, and I certainly tipped more, and my bill was a great deal higher, than if I had eaten in some small restaurant. It varies with the types of houses.
Senator Hory. That is all right. You just say you cannot state an average.
Mr. Sands. Now, in connection with this bill, as I understand it, and, if I understand rightly, several years ago the Senate appointed a committee of laymen to thoroughly discuss this question, and it was thoroughly discussed by the committee, and the committee came in, as I understand it, with a unanimous recommendation on this phase of the question.
The facts are these—and someone asked the question as to the approximate number of tip-receiving people in a hotel, and it was estimated at 30 percent. Well, that is pretty accurate. I would say 25 percent of the employees of a hotel are in the tip-receiving class. And the hotel men in their negotiations show that they now recognize that, because when we negotiate a contract all kitchen employees are excluded as tip receivers, all maids are excluded, and the only ones left in the tip-receiving class—and their wages are based accordingly, are bellmen, lavatory attendants, waiters, and waitresses. Even the bartender in Washington is excluded as a tip-receiving employee. They concede that. So that would leave you about 30 percent. And here is an international with 450,000 people who discussed this proposition and at their convention by a great majority voted that they wanted their tips paid on them by their employers and paid on them by themselves for the purpose of building up their account in the Social Security System. Ånd if we don't do that for this class of workers, we are not accomplishing what the law intended to do when it was enacted—to provide some security for these people.
Senator KERR. How would you make that effective, Mr. Sands?
Mr. SANDS. Exactly as H. R. 6000 does. H. R. 6000 was recommended to this committee of the Senate, and it went through the Ways and Means Committee of the House, and now the House has passed it, and it provides, as I understand it, that within 10 days after the quarter the employee submits to his or her employer the amount received in gratuities the past quarter, and one and a half percent, which is the tax, is added to the amount. The employer then takes that and adds 112 percent and files it. And as I understand this law, it is absolutely obligatory on the part of the employee to make that provision and to inform the employer and pay. Otherwise it absolves the employer from any responsibility. He certainly can't report what Jane Smith, the waitress, made, if Jane Smith doesn't go in and tell him what she makes.
Senator MILLIKIN. How do you meet the administrative objection that was made by the gentleman who preceded you!
Supposing a waiter is a banquet waiter and goes to a different hotel every night, sometimes a couple of hotels. How would you handle that?
Mr. SANDS. Well, in most of the cities where they have a number of banquets, the banquets are arranged for, and if the one giving the banquet doesn't put his foot down and say, “Here, I don't want to have anything added on to my bill. If my guests tip the waiter, all right, and if they don't, O. K.”—then if the waiter receives any tip at that banquet or not, he has to be satisfied. But they have worked out a system now where there is a percentage that goes on the bill. In some cases it is 10 percent, in some cases 12 percent, and in some cities it is maybe more. So that if you go in and arrange for a banquet for $10, and the actual food is $7.50, 10 percent is added on to the $7.50. Of course, it isn't added on to what you pay for flowers or for what you pay for entertainment.
So when you get your bill, the tip is already on there, and your guests at the banquet are not embarrassed by tipping or by a plate being passed, or anything like that. Then the union paymaster goes to get the check for the extra men, maybe a hundred extra men. And let's say it is $4 for serving the job, plus the tip.
Senator MILLIKIN. I do not think I made myself clear. Supposing the waiter worked for 25 different employers during the month. Does he go to each one of those with a statement of the tip that he received there and make a statement to 25 different people at the end of the quarter?
Mr. Sands. Well, if he was in a city where banquets were so many that he worked for 25 a month, the chances are that he would be booked through his organization or club, and they would take care of all that paying. He wouldn't even have to go after the money. We have taken that all over from the hotel men. In fact, we become the paymaster of the hotels, and save them a lot of money by getting one check and paying off the tips and the salary to the worker.
Senator MILLIKIN. Let us take a hotel like the Willard, for example. Let us not talk about the Willard, but a hotel of that type.
Mr. Sands. The Willard is a good hotel.
Senator MillikIN. What percentage of the total earnings of the waiter consists of tips!
Mr. Sands. Well, they have worked out this system, Senator, for the purposes of unemployment insurance, workmen's compensation, and income tax. The waiters in a hotel like the Willard have a little shop meeting
Senator KERR. A little what?
Mr. Sands. A little shop meeting. And they thrash it out. Then they come to a sum which they will report for income-tax purposes to the employer, and it may be $3 a day or $4 a day or $5 a day.
Senator MILLIKIN. What is it, usually, in thai kind of a case? I am not talking about the Willard, but any such hotel.
Mr. SANDS. I understand that in the Mayflower Hotel the waiters report $4 a day for the purposes of income tax, and I understand in the Washington Hotel it is $3 a day. And they do that.
Senator KERR. What relationship does that have to the facts?
Mr. Sands. Well, I will be perfectly truthful. I don't believe that they give the Government any the best of it. I believe they are like all the rest of us. We hire people to help us pay as little as we can. But in this case, this may have a tendency to up that.
Senator KERR. Would you refer to that as lying within the law?
Mr. Sands. Well, I don't know. You take a waiter in the Mayflower Hotel. After he pays his expenses in connection with the work, I don't think he would have much over $24 left. Some of them might, but I don't think he would have much over that. I mean, he has got to have a clean shirt.
Senator KERR. As I understand it, the members of the committee are trying to get some information, which I would like to have, and that is your opinion as to how much they receive in tips.
Senator MILLIKIN. What is the base pay of a waiter in a hotel the type of the Willard, a hotel in Washington, D. C.!
Mr. SANDS. It is less than $25, but out of that $25, there is deduction for the meals served the waiter. I believe it is 60 cents a day. I think his base pay would be around $21.
Senator Taft. How can you do that? Is there not a minimum wage here in Washington ?
Mr. Sands. No. Unfortunately the Senate was in such a hurry to get away that we didn't press our amendment to put the District of Columbia under the Fair Labor Standards Act. No; that is the funny part of our business. We are here under the National Labor Relations Act, but we are not under the Fair Labor Standards Act in the District.
Senator MILLIKIN. Now let us go down to the Sinton Hotel, in Cincinnati, which I understand the Senator, here, owns.
Senator Taft. No; I have no connection with it. I want that understood.
Senator MILLIKIN. The Senator disclaims any interest in that hotel. I miscalled the name of the hotel. But let us take the Sinton. What is the base pay of a waiter in Cincinnati in the Sinton Hotel ?
Mr. Sands. I am not qualified to say. It would be something around $21 or $22.
Senator MILLIKIN. And a 30-percent provision for tips?
Senator MILLIKIN. The base pay, you said, is $21 or $22. Now, we are trying to find out what the earnings are. How much do you add to that?
Mr. Sands. Well, your earnings you cannot figure except from the employee himself. For example, a waiter comes in today, and he doesn't feel well; he perhaps gives some of his work over to the other waiters to do for him.
Senator MILLIKIN. Let us assume now a normal case where a fellow feels reasonably well and does not get anybody to take his place. He comes at the appointed time, leaves at the appointed time, does his duty as a waiter during the day. What is his base pay?
Mr. Sands. His base pay in a hotel like you mentioned in Cincinnati would be $21 or $22.
Senator MILLIKIN. Now, how much would be a fair addition to make to that because of tips, to get at his total earnings?
Mr. Sands. Well, you couldn't do that, Senator.
Senator MILLIKIN. Then there must be some way of doing it. That is what I wanted to find out.
Mr. SANDS. Exactly. It has been done. I have pointed out that it has been done in three instances. When the employer pays premiums for unemployment insurance, he knows what the waiter has told him, and he takes his word for it.
Senator MILLIKIN. Do you not think that the representatives of the waiter have as good an idea as the employer?
Mr. Sands. The representatives of the employees?
Senator MILLIKIN. Do not the representatives of the organized waiters know how much they are making for tips?
Mr. Sands. You mean the outside business agents, or presidents ? Senator HOEY. No. You.
Senator MILLIKIN. As I understand it, in the hotel the men are organized.
Mr. SANDS. That is right.
Senator MILLIKIN. Is there not somebody there that has a pretty close idea, either among the waiters or representing the waiters, as to how much in tips those boys are making ?
Mr. SANDS. Individually, as a whole, or on an average?
Mr. Sands. You couldn't determine it.
Mr. Sands. They come together, the waiters do. They agree on an average over the year—the approximate tips. That is what they report.
Senator MILLIKIN. How much is that?
Mr. SANDS. Well, I think they report, in the hotels of Washington, in some hotels $2 a day tips, and in others $3, and in some $4, and maybe in some cases more.
Senator MILLIKIN. Let us move down the street a little from the Willard and get into a restaurant like one of the Childs type. Is that organized ?
Mr. ŠANDS.. No; not in Washington.
Senator MILLIKIN. Let us find a restaurant of that type that is organized. What is the base pay of the waitress?
Mr. SANDS. The waitress?
Senator MILLIKIN. What tips will a waitress pick up in that type of a restaurant, average?
Mr. SANDS. Well, I couldn't answer that question, Senator. But the State of New York officially on this has set a percentage, and it is recognized. I don't know if it is by statute, but it is recognized for all these things that it is a percentage of 712 percent of the check. That is what the State of New York has put in and recognized that the waiter or waitress makes. It is 71/2 percent of the check. Now, they may make 10 percent in some cases. I don't know. But as a rulé the public figures about 10 percent of the check in tips.
Senator MILLIKIN. I would like to get the answer to the administrative problem proposed by the gentleman who preceded you. In the case of these in-and-out waiters, the fellow who works the banquets, how is he going to report his tips without reporting to 30 or 40 people at the end of the quarter?
Mr. SANDS. The employer already knows it in most cases.
Mr. Sands. No; he doesn't. He doesn't have to go to any of them. Because when you give a banquet, Senator, the tip is already added on your check.
Senator MILLIKIN. Yes.
Mr. Sands. Unless you specifically stated, “I will take care of the tipping question.” If you do that, they don't add anything. But if you just leave it to the maitre d'hotel or the head waiter, that is already added on your check.
Senator Millikin. Now it is said that at that end of the quarter, so many days after every quarter, the waiter turns in his tips. Is that right?
Mr. Sands. That is right, a report of his tips.
Senator MILLIKIN. Well, he works for 30 people. Does he not have to make 30 reports to 30 people? If I am an employer, I am not going to make my contribution on the basis of his working for 25 other people.