To TIP or not to TIP? That is the question!

I heard a story today about a woman who ate at a restaurant, then left no tip along with a note explaining that she was on a fixed income. Most readers have a very strong opinion on weather she was justified in her actions. For those of you who think she is in the right, would it make a difference if I mentioned that she was seventeen years old? Either way, read on…

First and foremost, lets define our terms. What most Americans think is a TIP is actually a gratuity. A gratuity is an optional compensation added onto a check at the end of a service experience to say thank you for your time and effort. Whereas, a TIP literally means To-Insure-Promptness and is given upon arrival at an establishment to the person you want to look after you (an upfront bribe of sorts). Once we adopt the right word, the inevitable debate ensues… how much gratuity is appropriate? 10%? 15%? 20%? More?

It is important to note that with fifty different states in the USA, their are fifty different laws that govern the minimum wage for the service industry. In Washington state, for example, they are discussing a minimum wage of $15 per hour. Many residents of that state are complaining that since servers would then be getting a living wage, gratuity should be eliminated all together.

New York, on the other hand can legally pay its servers only HALF of the national minimum wage. When I opened PER SE restaurant in 2004 they had a Service Compre policy, the price on the menu was the price you paid (plus tax). I received a handsome hourly wage and was not allowed to accept extra.

Thanks to Ronald Regan and his TIP-TAX law, the federal government has declared that (at the individual states discretion) tipped employees may be paid 50% of the national minimum wage because they supplement their income with TIPS (yes… I mean gratuities, but I didn’t write the “TIP”-TAX law). Further, the law assumes that all ‘TIPPED’ employees are making at least 8% gratuity and must pay a minimum tax on that 8%. And while most servers make more than 8% gratuities annually in extra income, they are legally obligated to report the extra it to the IRS.

Getting back to our cheapskate 17 year old. She would argue that because the gratuity is optional and she can’t afford it, then she shouldn’t have to pay extra for the right to eat there… and in fact, legally, she would be right.

HOWEVER, when you leave a zero gratuity you are FORCING your server to pay 8% taxes on ZERO INCOME which by anybody’s standards makes you inconsiderate to say the least. So yes… gratuities ARE optional and you should always leave at least 8%… UNLESS you genuinely have a good excuse. For example, YOUR server was blatantly insulting or rude (and not because you left a zero gratuity). Even then, many servers pool tips or must tip out their back server or busboy. Why should those other workers lose gratuities because your server stinks? And, more importantly, why should you have to fork over extra dough for a bad experience?

I have a suggested solution. Applying my 30 plus years in the industry, here is my personal rules on leaving a gratuity:

Leave 0%: for the most extreme cases where a server was obnoxiously rude or insulting. I leave them nothing WITH a complaint to management. If you don’t complain then everyone thinks you’re cheap and no lesson is learned. Most people HATE confrontation and hate to complain, but if you simply leave, some of the more oblivious bad servers will think you are a cheap bastard. And once you walk out the door, the details of your service are generally forgotten (so don’t bother calling to complain when you get home).

Leave 0-8%: for lazy or apathetic servers who have an attitude or just don’t care about the quality of their work. Again, if you just walk out the door without letting a manager know why you gave a poor gratuity, they think you’re the ass and spit in your food if you ever come back (not that I ever did).

Leave 8-15%: is for bad service where the server was trying but failed. If they are new or incompetent it’s true that you shouldn’t have to suffer, still they are trying. Have a heart and leave a little something so they are not literally paying the government to learn their less-than-minimum-wage job.

Leave 15-20%: for good, unobtrusive service where any complaints you may have about the restaurant have nothing to do with the service. I have met many customers who reduce the servers gratuity because they thought the manager or ambiance was bad.

Worse, I know a lot of people that vehemently think their server should be entertaining to get a good gratuity. Really? News flash: Servers are in the Customer SERVICE Industry not the ENTERTAINMENT Industry (although we all know a waiter or ten who is an actor on the side). If you are entertained, BONUS, thank them accordingly by leaving an extra gratuity.

Leave 25%+: On the rare occasions when the service exceeds expectations along with a compliment to the manager on the way out. A compliment means just as much to a great server as a complaint does to a bad one.

Finally, for those of you out there with a legitimate fixed income. I get it. I used to be a poor student living on broccoli with garlic sauce. However, I suggest that if you can’t afford 8% on top of the check, then you simply can’t afford to eat there. Can you eat there legally? Yes, of course. Are you a bad person if you deliberately go into a restaurant and can’t afford a minimum gratuity… yes, you are. And that goes double for you penny pinching millionaires our there who don’t tip on the wine service when it is properly done… you know who you are!

Don’t agree? Tell me why?