There has been much fuss recently about doing away with tipping in restaurants all together and replacing it with an extremely vague “service charge.” While many people seem to be happy to hear this, I am one of those who see it for what it too often is....a cash grab by ownership to unethically divert the income of their bartenders and servers and use it to pad manager and staff salaries.
After all, why should the owners of the establishment continue paying manager bonuses when their own hard-working employees can do that for them? It seems to good to be true, right?
Now don’t get me wrong if the fee tacked onto bill is labeled as a “staffing fee” than I suppose that could be seen as slightly more forthcoming, although I strongly believe that the average customer has no idea to whom their server’s “tip” is now being redirected. Is it subsidizing manager salaries? Kitchen payroll? Overnight cleaning crew? Maintenance staff? Who knows.
In other words, money actively earned by the servers is now going towards paying labor expenses that have historically been paid for by ownership. After hearing this, it is no wonder that so many operators are eager to take this path.
On the flipside, if the fee tacked on says “gratuity," yet this money is still being diverted toward ownership’s labor costs, I would go so far as to say this is dangerously close to consumer fraud and that the customer is being taken for a ride.
Granted there are a few places that are legitimately using an automatic flat gratuity as a means of distributing funds between the service staff, but that practice hasn’t been picking up as much steam.
Another fair, but less popular route is to incorporate the cost of all labor into the price of the food and compensate employees via higher hourly wages.
This practice is the norm in Europe and eliminates tipping entirely. However, many restaurants in the US are wary due to the fear that it might make their prices look higher than competitors.
As for the wise consumer, if you wish to avoid being duped by a potentially dubious establishment, I would encourage you to go ahead and ask your server or bartender how the fund works. After all, it is your money and you have a right to know where it is going.
California Labor Law has this to say about service charges: "Such charges are considered as amounts owed by the patron to the establishment and are not gratuities voluntarily left for the employees. Therefore, when an employer distributes all or part of a service charge to its employees, the distribution may be at the discretion of the employer..."