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Controversy Over Built-In Tips

Built-In Tips: Fair or Not?

Of all cities in America, New York is certainly one that's suffered severe economic blows — yet it has the highest cost of living in the country. To protect its diners from sky-high gratuities, the city's Department of Consumer Affairs has instituted a policy preventing parties under eight from being charged automatically for tip.

Big Apple blog Newyorkology set the record straight: New York restaurants may impose gratuities only for parties of eight or more. Even in those cases, the fee must be 15 percent or less, and diners must be forewarned with a listing on the establishment's menu in font that is 10 point or larger. Despite these strict guidelines, the New York Post uncovered a dozen restaurants that were breaking the local law; those violators are hit with fines ranging from $50 to $500.

In a city where a good percentage of the denizens make a living waiting tables, I can understand the pressure for higher gratuity. But I also feel that diners need to be protected against rising costs — if not, there won't be anyone dining out at all. What do you think about the predicament? When dining out with friends, do you mind getting a built-in service charge?


Join The Conversation
bonniebonnie bonniebonnie 8 years
The majority of the time, the tips left are not influenced at all by the service they've received. I worked in the service industry for over 7 years. Half of the population are good tippers and half are bad. I have been stiffed on large tabs even though I worked my ass off to serve my customers. I have also been tipped generously even though I was totally slacking. I am in favor of a gratuity of 15% on tabs for parties of 6 or more. Especially when I'm only getting paid $2.38 an hour (in Texas). Some people are stingy no matter what the service is like. I don't wait tables anymore because I don't want to be at the mercy of my customers and the economy.
Shellper Shellper 8 years
Seriously? The tipping opinions on this website (which I love) are making me more and more upset... Of course it is necessary to have gratuity added on to a check for a large party. I have worked in the industry for about 4-5 years now (desperately trying to get out) and we always add gratuity to any table of 6 or more, no matter how high the bill. I tip out 30% of the tips at the end of every night. 8% to the bartenders 10% to the bussers and 12% to the food runners. A LOT of people are earning their income off of the tips, not just me. Have a little respect and consideration.. the harder you work the more income you make. It is the same as any other industry.
muse2323 muse2323 8 years
I'm a 20% tipper if the service is good, and servers have to screw up royally to get less than 15% from me. There have been the rare occasions, however, when I haven't left anything (like when they failed to bring me my sandwich till after the rest of my party had finished eating--I would've said something before that if she'd come back to check on our drinks, but she failed to do even that, and you know, there were only two other tables to serve at that time of day).
wdeanne wdeanne 8 years
If I am with a large group of friends and the tip is built-in and we receive poor service I ask the manager to remove the tip and I explain how the service was poor. On the other hand when we go out and we receive excellent service we tend to add to the tip an additional 10% - 15%. I train others on Customer Service and waiting tables is hands-on customer service; and it is a very difficult job. I applaud all who can do it well and I think they deserve the extra money. One last thing, if the tip is built in and the service is very good most people will not increase the tip and the wait staff has missed making extra money. Just my .02
lizbang lizbang 8 years
To Quote: #17 - ...But since there ARE people rude enough to leave nothing and servers' paychecks depend on tips... #36 - ...People generally tip more than the 15-18 percent that's added in, but for some reason, people tend not to add in an additional tip when it's already included.... I understand both of these statements to be true (at least in my experience). The real question is which is more common? Do those people who tip more make up for the idiots who leave nothing? I really think it does. There's also a really good way to do your own experiment with it...the next time you work spend the whole evening _not_ including the tip. At the end of the shift (or keep a tally though out it) calculate the amount of tip that you would have made if _everyone_ tipped exactly 15% (or 18?%, or whatever you put on the tab). My guess is that a good 95% of the time the not included nights will win by a long shot...unless of course you work at one of those places that put 25% on the bill! or unless you're having an off night and providing poor service...
lilkimbo lilkimbo 8 years
And I used an anecdotal point because it's all you provided. Just because you seem to know a lot of people who are OK with breaking the law does not mean that the whole system has to be overhauled.
lilkimbo lilkimbo 8 years
I see what you're saying now, shoney. I still don't see a problem with tipping, though. A lot of people who work in retail work on commission, which is also rewarding good work. No one takes home less than minimum wage in either field, though.
shoneyjoe shoneyjoe 8 years
@ lilkimbo, You've misunderstood. I wasn't arguing from the position that people receive a sub-standard wage, and I wasn't arguing that people take home a sub-standard wage. I was arguing that the economic burden lies first with the customer to make up the shortfall instead of with the employer, which is the systemically efficient solution. The argument was not about take-home, the argument was about incentives and burden shifting within the frankly bizarre tipping regime in which seespotrun was operating. As to tax avoidance (evasion is a clumsy and loaded term), the substantive fuzziness on the margins between legal and enforceable cause many to stray from the straight and narrow. I know that your #44 wasn't about tax avoidance - but because those arguments featured heavily in my comments #32 and #43, I thought I'd reproduce them again. I'm advocating for changing the system because the motivations and economic incentives that move the actors are flawed and inefficient. Your comment seems to be "this is how I saw something done," which I can't dispute or prove, it being an anecdotal point. So here's an anecdotal rejoinder: a former server I eat out with on a pretty regular basis will pay by card but tip by cash in order to assist in the tax avoidance. And this is a guy who's worked for the IRS.
lilkimbo lilkimbo 8 years
My comment #44 was not about tax evasion, it was about the idea that people are actually only taking home the reduced minimum wage, which is not the case. But, in relation to tax evasion, I don't know what kind of establishments you've worked at, but I would report them. I have never known a restaurant to actually only report minimum wage for all of its servers. With credit cards being so prevalent these days, it's next to impossible.
lilkimbo lilkimbo 8 years
Shoney, it makes a HUGE difference because you were arguing that people receive a sub-standard wage, which is not the case. I have worked as a server and known restaurant owners. When I was server, we reported all of our tips. Our owners were adamant about it. Some people abusing the system is a silly reason to scrap it altogether.
shoneyjoe shoneyjoe 8 years
lilkimbo, that's not a difference _that_makes_a_difference_ because I'm not referring to the federal minimum wage as a ceiling for wages. It is a problem that anything *higher* than the federal minimum wage doesn't get taxed unless there's a clearly demonstrable paper trail (as in credit card receipts). That the employer must make up the shortfall in the rare occasion that a server doesn't make the bare minimum wage does not change my argument that we the customers are asked to make up that shortfall first - it's primarily our onus to do so. Additionally, in employer wage reporting forms, the bare minimum is what is declared no matter what - all waiters make minimum wage *on paper,* regardless of the actual net income: yet another tax dodge. Plainly, employers are complicit in the system. Where both employers and employees are assumed to be dishonest, clearly the system does not work. And yet it persists.
lilkimbo lilkimbo 8 years
Shoney, there is an inherent flaw in your argument. Federal law mandates that tipped employees receive regular federal minimum wage if they do not receive enough in tips.
shoneyjoe shoneyjoe 8 years
@ seespotrun: "I paid for my food/service/whatever is built into the costs. Tips should be when they do something beyond their duty." That's correct, up to a point. You paid for your food (check), and your "whatever" (let's call this "profit": check). However, you did not pay for your service, and neither didn't pay for it in full either. Your server, assuming federal minimum wage, is making $2.13 per hour. Your chef, assuming federal minimum wage, is making $6.55 per hour. Why the discrepancy? Because you get to decide how much that service is worth. You lucky dog. This is kept in place by a number of public policy justifications, prime among them is that tipping is quintessentially *American* as it allows the free market to run its course and rewards outstanding behavior. The problem here is that under your regime, seespotrun, in order for waiters to make the bare minimum wage demanded by the Fair Minimum Wage Act of 2007, they have to act "beyond their duty." To demand outstanding work in order to reach wage parity at bare minimum makes no sense. Suddenly we're in Lake Wobegon, where all the waiters are above average (and they'd have to be in order to make minimum wage under your theory). Perhaps you're thrown off by the word "gratuity." Maybe instead the line should read "diner's contribution to the minimum salary of the waiter." Furthermore, when you leave cash for that "outstanding" work, and it happens to outstrip the $4.42 difference that the federal government assumes will be made up in tips (the government assumes above average work for everyone? Is this where the deficit comes from?) then the waiter has no incentive to pay federal income tax on it. Congrats, you've turned something fundamentally *American* (the free-market reward of tipping) into something fundamentally *unpatriotic* - tax avoidance. Apparently we all do it. I'm curious as to how you tip. You state that it's "a load" that someone who brings you a burger deserves less of a tip than someone who brings you a steak. If you don't believe that a burger and a Coke (let's say a generous $15) and a ribeye and Malbec (roundabouts $40) should be tipped differently, do you apply the socially accepted $2.25 for the burger to the steak (now a 5.6% tip) or do you tip $6 for both (now leaving a very generous 40% tip on the burger)? Or do you tip consistently the only way you can: $0 for both, at 0% for both. At which point I'd have to ask if you were European? tlsgirl has it right in her most recent comment - the solution I proposed above was based on perfect information: you know that they're going to charge you and you either patronize or don't. The Post article said that the diners were being levied the mandatory gratuity without their knowledge. And at that point, my argument changes to suggesting a name and shame in order to provide other diners with requisite notice.
lilkimbo lilkimbo 8 years
Seespotrun, I see what you're saying to some extent, but at the same time, a lot of times more expensive restaurants offer more attentive service, so servers have fewer tables at one time.
seespotrun seespotrun 8 years
Tips are earned. Time for restaurant owners to pay their employees a decent salary. I paid for my food/service/whatever is built into the costs. Tips should be when they do something beyond their duty. I don't buy the fact that someone who brings me my burger deserves LESS of a tip than someone who brings me my steak. What a load. To pay based on a percentage of the bill is a freaking crime. And to those who said "if you can't afford the tip, don't go out", excellent tip. Let's further contribute to the demise of restaurants. That said, if all/most restaurants offered "to go" options or if I have to go to the restaurant to get the food myself b/c I have to pay extra, heck, I'd do that.
lilkimbo lilkimbo 8 years
I had never thought of it that way, skigurl, but what you're saying definitely makes sense. If they are concerned about people forgetting to tip/leaving out the tip/etc., they should just put the tip scale at the bottom. I have no problem with places putting the 15%/18%/20% at bottom of the check.
skigurl skigurl 8 years
i've never been in the service industry so my opinion probably isn't super worthy, but i don't like when they do that. it's up to me how much to give. i find it just assumes your big group is too immature to think to tip. why wouldn't i tip when out with 6 girlfriends as opposed to out with just 3? my mentality doesn't change based on crowds!
lilkimbo lilkimbo 8 years
It is not about being too cheap. For good service, I always leave 20%, for ok service, I leave 15%. For great service, I leave more than 20%. But, I have had servers who didn't come to my table for 45 minutes after our food arrived. That server was not running back and forth to get me juice, water, napkins, ketchup, and everything else under the sun. In fact, when the server took my original food order, he didn't write it down and every single person's order was incorrect. But, we were so hungry that after we waited 20 minutes without seeing him, we wound up eating it anyway. The restaurant had a built-in 18% tip and the manager wouldn't budge.
caramelqtee75 caramelqtee75 8 years
it's totally fair, anyone could say they are not getting good service, if a person is running back and forth getting you juice, water, nakins, ketchup, and everything else under the sun - they deserve a tip. If you are TOO CHEAP to tip your servers, then DO NOT EAT IN THE RESTURANT, Eat at home.
lilkimbo lilkimbo 8 years
Anyway, I think the policy is ridiculous and almost everyone I know who has served agrees with me. People generally tip more than the 15-18 percent that's added in, but for some reason, people tend not to add in an additional tip when it's already included. Also, as others have mentioned, the purpose of a tip is to reward good service. (or "to insure promptness") I generally get the worst service when the tip is built in.
lilkimbo lilkimbo 8 years
I agree with you, tls. It's difficult to avoid this policy sometimes. Additionally, when you go out to dinner on a Saturday night and wait 30 minutes for a table even with a reservation, it's not like you are going to be willing to leave when you sit down and see the notation on the menu that the tip will be built-in. Also, the story does refer to large groups. Sometimes when you are going out with a large group of friends, you don't have choice as to where you'll be eating.
hippiecowgirl hippiecowgirl 8 years
I've noticed that service tends to suffer when the tip is built-in to the bill. That bothers me a lot. I'm a generous tipper so if I got good service I'd probably tip more than the 15% anyway. It also bothers me that people are skimping what they tip for good service in order to save some money. I understand not overtipping, but give credit where credit is due.
tlsgirl tlsgirl 8 years
Shoneyjoe - nope, not your comment :) Although with regard to restaurant choice, it seems from the article itself that the restaurants that are building in tips for small parties aren't advertising that fact. For large parties (although I personally don't have a problem it in that situation), the policy is so widespread that you really can't avoid it.
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