Fair Wage Fee Explained
The hospitality industry as a whole is facing extreme labor shortages and continues to operate in a volatile market due to COVID and an economy facing unique challenges. In order to retain and attract employees, the industry has begun to reevaluate traditional compensation models in favor of structures that allow restaurants to pay fair and equitable wages to support all team members in good times and in challenging ones.
In lieu of the traditional tipping model, Caboose has implemented a 15% Fair Wage Fee to food and beverage orders to support higher wages for staff in all departments, from dishwashers and line cooks, to hosts and food runners. Our staff is no longer entirely reliant on tips for income, providing them with a more predictable, stable paycheck. This compensation model is new to many people and we understand that it is unusual, yet we believe that we are doing the right thing for our employees.
How much do your employees make?
All hourly employees are paid a base wage more than 5x the tipped minimum wage of $2.13/hr that most restaurants pay tipped employees. Multiple opportunities for training and certifications allow employees to quickly increase their base wage to $15/hr or more. Since 100% of our employees have a base wage higher than the standard Federal and State minimum wage, Caboose is not taking a tip credit on any wages.
So is the Fair Wage Fee a tip?
Not quite. The Fair Wage Fee is not a gratuity, it is a fee that goes to Caboose to fund higher base wages. All tips are pooled and distributed to employees on top of their base pay. Tipping is optional, and the suggested tip amounts are lower than “normal” tip amounts because of this changed structure. On average, tips account for less than half of total compensation.
Is this just more profit for Caboose?
100% of the Fair Wage Fee is paid out to hourly employees in the form of these higher wages. After applying all of the Fair Wage Fee to our payroll costs, Caboose average labor cost remains higher than industry average.
Why not just raise prices?
We chose not to build the cost into our products to more clearly communicate where the Fair Wage Fee is going. We do not apply the Fair Wage Fee to retail items, such as canned beer and merchandise.
If you have any questions, please feel free to reach out to firstname.lastname@example.org or speak with any manager.
If you’d like to join the Caboose team, check out our openings on Indeed or send your resume to email@example.com