Is Eliminating Tips a Good Idea?
Last year, a restaurant owner in San Francisco, Thad Vogler, took the initiative to eliminate tipping in both of his restaurants in a search to increase restaurant worker rights. Such a move in the restaurant industry is expected to have a positive impact on its tipped workers as well as back of the house workers. With tips eliminated, wages were set increase to benefit its workers. This pay raise was made possible by increasing item prices at his restaurants, Bar Agricole and Trou Normand, by 20%. This new policy was intended to relieve servers from relying on tips as part of their income and increasing the pay for kitchen staff who never had the added benefit of receiving a gratuity.
The results
However, the results quickly became anything but positive. Servers began quitting regularly and Vogler spent more time rehiring and training new workers. By his calculations, during the 10 month period he eliminated tipping, 70% of his tipped employees had quit their positions. His servers became very unsatisfied as time progressed mainly due the direct hit they took in their paychecks. Before the change, all tips included, a server at either of his restaurant locations was averaging about $35-$45 per hour. After the non-tipping policy went into effect, the servers were making $20-$35 per hour.
What went wrong?
Vogler admits that even though he knew his servers would be facing a 10% loss, he thought they would stick with him. However, expecting workers to take a loss if they knew they could leave and earn those additional tips elsewhere was a mistake. For tipping to be successfully eliminated and an overall increase in restaurant worker rights, other establishments would have to follow suit and join in on the reformation of the industry standards. According to Vogler, he would currently have to increase the pricing on the menu by nearly half, a whopping 40%, in order to keep the servers pay the same without receiving tips and also be able to increase his kitchen staff’s pay.
Tipping has now been reinstated at the restaurateur’s establishments but the menu prices have not gone back down completely. Vogler claims he continues to be dedicated to making sure the back of the house workers benefit from increased wages. He boasts that his kitchen staff now makes 15-25% more than they did prior to 2015.
Wage and hour laws in the service industry are constantly subject to change. If you work in the industry and are unsure about how you are paid or feel you are owed money, do not hesitate to call 212-300-0375 to speak to an employment attorney at our firm or visit us at www.fslawfirm.com. We offer a free phone consultation in which you can have your concerns and questions about restaurant worker rights addressed by one of our experienced attorneys.