Tipping is Vanishing from Some Restaurants

By Leeds Brown Law | November 10, 2015

Will You Be Tipping Your Server at Your Next Meal? It Depends on Where You’re Eating.

Eating out is one of America’s favorite past-times. We may go out to celebrate a special occasion, to enjoy a Saturday night with friends, or to share Sunday brunch with the family. Regardless of what brings us out to eat, we all have places we love to go to enjoy good food, service, and company.   Americans spent over $650 billion on food and drink in the hundreds of thousands of restaurants across the country – in 2013 alone.

Tipping is an American tradition going back to civil war times. However, this is now changing as, in the majority of the world, tips are not given to waiters, waitresses and bartenders.

How are Most Wait Staff Paid Today?

When you pay your check in a restaurant, the money goes to the restaurant. The restaurant then pays overhead, food costs, utilities and small hourly rates to workers.

As you may know, food servers often get paid an amount which is lower than the normal minimum wage. They rely on the tips they earn to supplement their wages. Some restaurants pool tips and the staff shares in the total amount. Others allow each individual staff member to keep their own tips. Either way, waiters and waitresses work hard to earn big tips by providing prompt, friendly, and knowledgeable service. Tips range from 15-25% in most situations, and in high end restaurants, wait staff can earn as much as $100,000 a year.

New Trend: Higher Wages, No Tips

There is a small but growing trend in some cities that is changing the restaurant experience for consumers and employees.   A number of restaurants are implementing new payment structures for their employees. Some establishments are eliminating the traditional model of low wages and uncertain tips, in favor of eliminating tips and putting servers on set salaries.


Restaurants Changing their Approach

The Washington Post interviewed Amanda Cohen, the chef-owner of Dirt Candy, a restaurant in New York City. Cohen is one of the restauranteurs currently trying something new with her employees. Cohen increased the wage she pays her entire staff to $15.00 per hour which is nearly twice the minimum wage in NY and three times more than minimum wage for food service workers who get tips. She has eliminated tipping in Dirt Candy and replaced it with a 20 percent “administration fee” which is added on to all bills. The money is not a tip. It does not go to the individual server or into a pool for the wait staff. Instead, it goes back into the business to pay for the higher salaries of the food service staff, including cooks, who never benefitted from the tipping structure.


Is it Fair to Take Tips Away from Food Servers?

There are several arguments in favor of a no-tipping approach, favored by both restaurant owners and wait staff. On the other side, there are some who do not want to lose the ability to collect tips.


Discussion Points in Favor of or Against Tips

There has been a great deal of discussion on the topic lately, with obvious concern by waiters and waitresses nationwide.

  • Does the elimination of tips discourage hard work and good service?
  • Do waiters even make an effort to deliver great service if they fully expect a 15% gratuity?
  • Do tips really vary between poor service and good service?
  • Should waiters and waitresses rely on the whim of a customer to determine their earnings for the day?
  • Why should their income vary based on whether a customer orders a salad for $12 or a surf-and-turf platter for $75?
  • Should customers feel pressure into leaving a gratuity, even for weak service?
  • What about tips for the rest of the staff who aren’t face-to-face with the diners?

The approach being taken by some restaurants includes:

  1. Increasing the hourly rate or salary of the entire staff
  2. Eliminating tips
  3. Increasing prices or adding an “administrative fee” which is used to pay higher wages to employees

The “administrative fee” will certainly be a confusing item for some. Yet increasing food prices can also discourage clientele from ordering certain items, because the price appears “higher” even though it is the same total after accounting for the tips.


How Will this Evolve?

In the coming years, we may see more restaurants going with no-tipping policies.

Will tipping ever vanish?

Will customers be opposed to non-tipping environments?

Will they understand higher prices and no tips vs. lower prices with tips?


Waiters and Waitresses – You Still Have Rights

While some restaurants may opt-out of tips and increase wages, this does not relieve restaurants of their obligations to their staff. If tipping is allowed, you are still entitled to your tips. This has not changed.

If your employer is withholding your tips, taking a portion of your tips for managers or for the company, or engaging in other inappropriate behavior, you need to assert your rights. Contact Leeds Brown Law, PC with any questions at (800) 585-4658.




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