With all the exposure out there from IRS/DOL regarding tips, overtime, workmen’s comp, etc., perhaps the best policy for you is to delete the words tips and gratuities from all your advertising and phone sales pitches entirely out of your company. Pay an hourly wage to the chauffeur that ranges from $12-22/hr (set up scale). You give a inclusive price to the customer and never mention tip or gratuity. If the customer asks, simply say our chauffeurs are salaried and their hourly fee is in our quote. You must pay the chauffeur from the time you tell him to be at your garage until he leaves after the job. If confronted by anyone, you simply say tips are not required in our company. However, if the chauffeur receives a gift, it is up to him to report it as miscellaneous income on his own tax return as any other employee with a company is supposed to do. If an hourly employee was working at Macy’s or Walmart and they receive $10 from a customer for whatever, they should report it but usually don’t. The point is there is no liability to the company because of its policy and paying a fair wage.
Some chauffeurs will initially squawk loud and you have to tell them this is the policy and if the program won’t fit them, then they will have to move on. You will not lose many chauffeurs. If you do, there are many qualified people who would love to be a chauffeur and many are unemployed. As I said, run an ad on Craiglists under security and you will get many applicants.
This compensation keeps it clean and simple and you will not lose volume but should gain.
Remember you are only as successful as your chauffeurs. You will have better control on them thus better results. Have them sign an employment contract give them specific job responsibilites written out.
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