It offers multiple voluntary agreement options designed to provide nonburdensome methods for employers and employees to comply with tip reporting laws, including the tip rate determination agreement
(TRDA), the tip reporting alternative commitment (TRAC) and the employer-designed TRAC.
The two tip reporting options are the Tip Rate Determination Agreement
(TRDA) and the Tip Reporting Alternative Commitment (TRAC).
The Tip Kate Determination/Education Program was developed by the Service "to improve the compliance of tipped employees in the food service industry." Under this program, the employer determines an accurate tip rate, validated by the IRS, then executes a "Tip Rate Determination Agreement
" Three quarters of the restaurant's tip employees must sign a "Tipped Employee Participation Agreement." The rate agreed on is then used in subsequent periods by tip employees and the restaurant.
Restaurants are being given two basic choices: TRAC (Tip Rate Alternative Commitment) or TRDA (Tip Rate Determination Agreement
Employers may participate in either the Tip Rate Determination Agreement
(TRDA) or the Tip Reporting Alternative Commitment (TRAC).
The TRAC agreement does not, however, encompass the determination of a tip rate based on historical data and the "McQuarters Formula" as is found in the existing Tip Rate Determination Agreement
. The decision to enter into a TRAC agreement is voluntarily made by an employer.