Cheeky Restaurants

We noticed restaurants have gotten more and more bold.  In San Francisco, suggested tips were up to 25%, going all the way down to 15%.  It's their way of saying, "If you tip 15%, you're among our cheapest customers.  Wanna know what our classiest, most generous patrons tip??"

In Utah (and other states), where minimum wage for servers is only $2.13/hr, the suggested gratuity is even more cheeky.  "Excuse me," they seem to say, "You're only tipping 15%???  I suppose that's technically the minimum..."

As long as restaurant patrons tip sufficiently to supplement their wages to $7.25/hr, restaurant owners can pay their servers only $2.13/hr.  Even worse, many servers technically earn below $7.25/hr some shifts, even after tips, because their employers pay them bi-weekly or even monthly, using tips from other days to round out the figures.

In southern California, where servers are paid at least the $11.00 minimum wage, we were surprised to see restaurant food the same cost as what we're used to in Utah.  (This was our experience.  A Cost of Living calculator I found online said a $13.00 restaurant meal in Salt Lake City would cost $15.00 in Los Angeles.)

Even more shameful, if an employee who isn't normally tipped receives $30 in tips in one month, that employee can be classified as a "tipped employee," thus permitting the employer to lower that worker's wages to $2.13/hr.  In Utah, more and more fast casual restaurants, where you pay at the counter ahead of time, are adding the option to tip employees (tip for what??).  If that employee pools $30+ worth of tips over the course of the month, the employers can take that $30+ for himself, by lowering the amount he pays the worker, and then using the $30+ to get the worker back up to $7.25/hr.  This transforms tipping workers into subsidizing the owner for paying below federal minimum wage.

Nolo.com describes the Utah law here:

Tip Basics

The basic rule of tips, under federal law and state law, is that they belong to the employee, not the employer. Employers may not require employees to hand over their tips unless one of these exceptions applies:

State law allows the employer to take a tip credit. Some states allow the employer to count all or part of an employee’s tips towards its minimum wage obligations. Although the employer doesn’t technically “take” the employee’s tips, the employer gets to count some tips as if the employer had paid them directly to the employee. Utah allows employers to take a tip credit.

The employee is part of a valid tip pool. Under federal law and in most states, employees can be required to pay part of their tips into a tip pool to be shared with other employees.

In an episode of Kitchen Nightmares with Gordon Ramsey, Ramsey was incredulous to learn that the restaurant owner of Amy's Baking Company takes all his servers' tips.  Upon learning this, he revealed to a customer, "Sir, the $10 tip that you left - the young lady, sir - the owner takes the tips."

To an extent, that's what we put up with in all the states that allow their servers to be paid $2.13/hr.

If a server workers 40 hours/week, 52 weeks/year, at $2.13/hr, is paid monthly, and the business owner balances his workers' wages monthly rather than daily, the first $887 in a server's tips is going toward the employer each month to subsidize him paying this server minimum wage.  That's $10,644/year that is subsidizing the business owner rather than going into the server's pocket.  "But if we paid servers $7.25/hr, restaurant food would be more expensive."  That's okay.  If we can afford to eat out, we can afford to pay a little more for restaurant food and tip a little extra, like they do in California.  If small businesses need a government grant to pay their workers $7.25/hr, I would be fine with that.  Just don't take it out of the servers' pay.

If a fast casual restaurant gives the option to tip upfront, I prefer to tip $0, because any tips for the month between $30-$443 (assuming the host works 20 hrs/week) will go toward subsidizing the business owner.  But as for the traditional dine-in restaurants where servers are likely tipped enough that the tips eventually reach the server, it's a little more complicated.  In those cases, perhaps the best way around it is to leave two tips - one for the business owner (on the check), and one in cash (for the server).