Frequently, the BBB receives complaints about restaurants. A few are from repeat non-tippers who got charged a gratuity by irritated management (like the 15 percent gratuity sometimes added to large parties).
Is it legal for a restaurant to do this? The BBB is not a legal entity and cannot give legal advice or interpret the law; your State Attorney General’s office may be a resource for you here. Is it ethical? That is a whole different question, and ethics have been in the purview of the BBB for almost 100 years.
Ethics are about fairness, and equality. One helpful question for business owners: If my loved one ate a meal at my restaurant, had a history of not tipping, and was charged an automatic gratuity, would I change my policy for them? If so, my policy may be wrong. One helpful question for customers: If my loved one worked as a waiter or waitress, received less than minimum wage, and no tips, would I be ok with that? If not, my attitude may be wrong.
One of the most-frequently raised tipping issues is what servers get paid by their employers.
Minimum Wage Facts
Federal minimum wage in the U.S. is currently $7.25. However, individual states may pay less. When I worked at a casino 15 years ago in the South, for example, it was legal for them to pay me $2.50 an hour, because my tips were counted in my minimum hourly wage. Tips do have to be reported to the IRS, but there is no double-checking process for the reporting of tips that I’m aware of.
The Connecticut Wage & Employment Standards website in 2010 stated that the minimum wage for waitstaff was state minimum ($8.25) less 31% for tips, which made it $5.69 an hour. However, state and federal taxes were taken out at the higher rate of $8.25.
In Great Britain, which historically has no precedent for tipping, and where servers and bartenders are covered under the national minimum wage, that hourly rate is about $9.64 (converted from GBP 5.63 at a rate of 1.6).
And what about that automatic gratuity?
With a flat fee, the cost of service is built into the prices on the menu, and waiters’ salaries are paid out of the total, a common practice in France.
A recent New York Times online article mentioned Per Se restaurant in Manhattan, which was taking tipping off the table completely and replacing it with a flat fee of 20%. Meals there start at $175 for one person.
According to the article, the flat fee would allow a larger portion of tips to be diverted to the kitchen staff, enable all employees to earn steady wages, and the owner was also planning to offer health insurance.
What do you think:
Does the practice of tipping encourage a master-servant relationship between customers and waitstaff that is demeaning? Or does the incentive of a possibly large tip energize servers to perform really well?
Is it ethical for a customer to eat out at a sit-down restaurant if you can’t afford to tip?
Is it ethical for a restaurant to charge a gratuity to single diners or couples who do not tip or do not tip well?
If you go on a date with someone who tips badly or doesn’t tip, does that make you think less of them?