John has been working at a five-star buffet in Tumon for almost 10 years and has worked his way up to become a supervisor. Despite the promotion, John still makes $8.75 an hour which is supplemented by tips from customers. The amount varies day to day. He believes he gets the most when the customers feel welcomed and well served.
There are several sides to the debate of whether to tip or not to tip. Working as a server for the hospitality industry could be a thankless job, where many toil for long hours at minimum wage rates. A tip for good service could help that college student working as a wait staff on a part-time basis or a parent working full-time to support their family.
Some contend that a tipping culture promotes an outmoded practice of rewarding money for service when good service should be part of the dining experience anyways. With tip credit statutes enforced in some jurisdictions, servers end up making most of their income from tips. Even without an enforced statutory tip credit provision for Guam, customers on island still end up paying a portion of the wait staff’s wages.
In 2017, the Guam Chamber of Commerce and the Guam Hotel and Restaurant Association began pushing for the inclusion of a tip credit provision in Bill 20-34, the legislation increasing the minimum wage on island. While the legislation was put on hold after the tourism industry experienced a slight downturn, the tip credit provision pushed by industry players generated an interesting mix of reactions from the public.
The provision mirrors similar legislation passed in other jurisdictions that allow employers to take a tip credit toward its minimum wage obligation for tipped employees, which is equal to the difference between the required cash wage and the federal minimum wage.
According to the Fair Labor Standards Act (FLSA), the maximum tip credit that an employer can currently claim is $5.12 per hour. With the federal minimum wage at $7.25 per hour, this means that employers are allowed to pay a tipped employee $2.13 per hour in cash wages. The rest are covered by tips from customers.
While industry players have a voice in the debate, those who serve are seldom heard.
Kyle (not his teal name) has been working as a cook on Guam for almost 10 years making $10.10 an hour. This is considered a blessing, because the average non-agriculture worker in the Philippines, where he came from, makes only $4.80 a day. Somedays he works 16 hours a day, his morning job is at a diner in Harmon and his night job at a five-star restaurant in Tumon.
Some contend that a tipping culture promotes an outmoded practice of rewarding money for service when good service should be part of the dining experience anyways. With tip credit statutes enforced in some jurisdictions, servers end up making most of their income from tips.
While he receives tips at the diner, he doesn’t get any tips at the five-star gig. He does receive service charge; however, he considers it to be too small. At most, he’ll get $20 a week every pay check. He makes about $700 in two weeks from his Tumon job. He looks forward to resigning from his job in Harmon, so he can spend time with his wife and two small children.
John always smiles and speaks enthusiastically to the guests, especially his regular customers. His regular customers are what save him, because during off season, sometimes only three or four tourists would come for dinner. John hopes things will get better at work because they recently took away the employees’ service charge, which has really disappointed him.
Another server (who wants to remain anonymous) who works at a hotel coffee shop clarified the difference between service fee and gratuity. "Service fee and gratuity are not the same. We don't get anything from service fee. It goes to the business. It is a common mistake. Most customers do not leave tips — or if they do, it would be much smaller amount— when they see service charge on their bill,” she said.
She also works part-time as a server in a restaurant in Hagatna. "At the end of night, the tip collections are shared among the staff,” she said. “As for the amount, it depends on how busy it is. It ranges from $20 to $80 a day.”
She added, “Tipping has become part of the Guam culture. I think we acquired that from Americans. I guess it has become sort of obligatory nowadays. Some people are worried they would be seen as cheap if they don't tip. When I go out to eat, I tip the server because I am familiar with the hard work, plus it is a way to let the server know that you are satisfied with the service."
While there are jurisdictions that continue to adopt a tip credit policy, states such as California have totally eliminated this. Meanwhile, the tip credit debate in New York continues as both sides weigh in on the pros and cons of eliminating this requirement.
Meanwhile, other states have reached a compromise by requiring businesses to pay their tipped staff the full minimum wage rate before tips. Without a standard to follow on Guam, the tipping culture on island remains an inequitable exercise, where rates are judged capriciously by customers. (With additional reports from Johanna Salinas)