Restaurants Have Changed How Tips Work, and Waiters are Furious

December 16, 2015 – In The News
The Washington Post

Carolyn D. Richmond was featured in The Washington Post article, “Restaurants Have Changed How Tips Work, and Waiters are Furious.” Full text can be found in the December 16, 2015, issue, but a synopsis is below.

A new rule issued by the internal revenue service which makes restaurants count auto-gratuity as wages, has caused many large chains to remove the added charge from their establishments. Employers may not wish to deal with the hassle and expense of the newly enforced accounting rule, but according to some, the servers are the individuals who are suffering.

As certain cities pursue higher minimum wages, the auto-gratuity dilemma is only one element of a larger debate which raises the question of whether the practice of tipping should be removed altogether.

Some restaurant groups have answered the question by announcing that they will phase out tips and raise the price of menu items in order to meet new wage minimums for both servers and kitchen staff.

“The larger problem is, does tipping still have relevance? Should base pay just go up? Is that the job of the employer, which it is in every other industry?” asks Fox Rothschild’s Carolyn Richmond, who practices employment and hospitality law at the firm. “You’re seeing businesses look for every possible way to pass on costs without raising the price of that burger. So we’re at a turning point right now for the restaurant industry, and that’s why you’re seeing these arguments over so many things.”

This article was also featured in the Yakima Herald, Corsicana Daily Sun, SFGate, and The Palm Beach Post.