No Tipping? The Future of Tipping in America

The practice of tipping for services rendered, especially in restaurants, is coming under attack by the Trump Administration, according to a report published in today’s Washington Post. The Post reports that the U.S. Department of Labor has just proposed new regulations to help narrow the pay disparity between the tipped servers and hourly cooks.  According to the proposed regulation as posted in Tuesday’s edition of the Congressional Register, tips given to servers would be collected by employers and redivided between the servers and the back of the house employees, who are presumed to be underpaid in comparison to the wait staff.

There is, of course, not so much disparity. In high end restaurants, chefs make very good salaries. The support staff, however, are often underpaid….but so is the wait staff. In fact, without tips, most wait staff would not be making a decent wage because waiters, waitresses, food runners and table bussers are not covered by federal minimum wage laws. The Fair Labor Standards Act (FLSA) allows employers to pay servers as little as $2.13 per hour IF that amount plus their tips exceeds the current Federal minimum wage. If the server’s income falls below the minimum wage, the employer must make up the difference.

The Arcane Rules of Tipping

There are some rather arcane rules that further complicate the situation, but the bottom line is that tips are what make waiting on tables a viable occupation….and restaurateurs have been making out like bandits by charging less than the full value of their meals and depending upon their patrons to make up the difference.

Knowing when to tip, how much to tip, and when not to tip are rites of passage for young people as they achieve their majority.  My father once made me walk three miles back to a restaurant when I admitted that I hadn’t tipped the waiter…and made me tip him three times the usual amount. My old man had been a cab driver and he remembered what it was like to live off tips and not get one.  Once upon a time, I thought 15 percent was adequate. My partner, who waited on tables earlier in her life, insists on 20 percent.  John D. Rockefeller was notorious for giving dimes as tips during the depression. His father probably never worked for tips.

Not having a choice about tipping is simply a covert way of charging higher prices than those shown on the menu, a clear case of bait and switch. Under the proposed rules, employers will collect all the money that consumers pay toward tipping their servers, and redistribute the funds among their employees according to whatever formula seems right to them. In effect, this would amount to giving much needed pay raises to the back of the house staff (excluding the chefs, who are already doing all right) by taking that money from the servers.

Robbing Peter to Pay Paul

There is some logic to the idea. The people in the back of the house – out there in the kitchen – are of course the ones who are actually making the meals the customers consume, doing the prep work, and cleaning up after the chefs and their assistants….but do they deserve to be compensated out of the pockets of the serving staff?

In many cases, servers voluntarily share tips with food runners and bussers. In some establishments, they share tips with the line cooks as well….but the injustice of forcing servers to share their tips doesn’t stop there. Under the proposed rule, employers could legally use the tip funds to cover their own operating and capital expenses. This would put restaurant workers into the position of underwriting their employers’ businesses.

Tipping has a long and muddy history.  In recent years, conflicting regulations and court rulings have made it illegal for servers to share their tips with the kitchen help. The new rule would make it mandatory to do so, in violation of federal appeals court rulings.

Even the word itself has a confusing history. First of all, it isn’t an acronym. It doesn’t mean “to insure promptness” according to Snopes.com, but Snopes could also be wrong on this occasion because tips were often given before service was delivered in order to “insure promptness” despite Snopes assurance that this was never the case. (It was quite often the case during and after World War II when everything was in short supply. Consumers back then would often slip some extra cash under the table to get a better cut of meat or an extra measure of flour.)

Whether or not it was ever an acronym, high end restaurants are increasingly moving away from that practice by adding a standard percentage to all restaurant bills and imposing a “no tipping” rule on both patrons and servers. This of course eviscerates the time honored practice of rewarding good service with an honorarium or punishing bad services by withholding the honorarium.

This ends up creating a situation under which the patrons are being forced to pay a 20 to 30 percent surcharge over and above the cost of their dinners, and allows restaurateurs to price gouge customers by citing one price on the menu but charging a high price at the checkout.

Time for a Consumer Rebellion

It is rare for us civilians to have an opportunity to stick it to the man, but this is one of those rare opportunities. If this proposal becomes law, I plan to leave a two cent tip on my charge card so that the employer couldn’t claim that the server was withholding tips….and then make up the difference in cash placed directly into the server’s hand. (My father taught me never to leave cash on the table.)

After that, it is up to the server to do what is right according to their lights. Of course, we can depend on the IRS to come up with a formula to track down tax cheats among restaurant servers….but you would think they might have something better to do, wouldn’t you?