Restaurant Industry Considers Moving Away From Tipping to Avoid Service Charge Lawsuits

Hospitality industry analysts are considering whether or not to discontinue the practice of tipping, in order to prevent service charge lawsuits.

Experts in various fields agree that if the practice of tipping were to be abolished, then the minimum wage would rise, and there would be no discrepancy over service charge distribution.

The end of tipping has been a long-time prediction of hospitality industry workers, regardless of how nice the restaurant is. Many restaurants and hospitality establishments have already switched over from tipping to basic service charge.

The resentment toward tipping has been growing in customers throughout the years, so hospitality experts agree that abolishing the additional charge of tipping would encourage customers to eat out more.

If tipping were abolished, experts expect basic service charges, which would incorporate higher wages from the purchase price of the food, to be the restaurant trend of 2014.

Many restaurant and hospitality workers welcome this change because regardless of what level of employment a person is at, tipping does add a complication to wages, and possibly takes away from it.

Additionally, critics of tipping state that it does entice servers to work harder, and the legal complexity behind gratuity charges sometimes results in wage and hour lawsuits over unpaid wages.

Tipping has been a bitter issue in the restaurant business for years, so many would not be saddened to see the practice cease.

However, people who support tipping say it is a time-honored tradition, it promotes good feelings between the customer and server, and that if a server does not have to earn their tip, then they do not have incentive to deliver excellent service.

However, the main argument to end tipping comes from direct experience of restaurant owners who made the transition.  With proper understanding about the service charge between the management, owner, servers, and customers, the morale of their restaurants were up, and it had increased in efficiency.

The service charge transition also allowed better possibility of bonuses, raises, and promotion of positions. The service charge is also easy to divide between cooks and servers, who would ideally make the same base pay.

Reportedly, restaurants started transitioning to service charges because of the January 2014 IRS policy, which states that automatic gratuities are to be considered a service charge.  This exposes the gratuities to the payroll taxes and equitably split gratuities. Experts state if this movement continues, tipping may eventually become extinct.

Overview of Service Charge Class Action Lawsuits

For some restaurants, the transition cannot come quick enough, as many have faced legal discrepancies over service charge misunderstandings. In the past several years, there been an increase of wage and hour lawsuits filed against restaurants and hospitality industries, regarding service charges and hospitality fees. Legal experts state that until these industries completely understand the difference between a gratuity and service charge, the lawsuits will continue.

According to federal law, while service charges can be withheld at the management’s discretion, it is illegal in some states to not disclose that the service charges do not go to the servers, in where lies most of legal discrepancies.

File a Restaurant Wage Class Action Lawsuit Today

If you believe that you or a loved one have been the victim of a Wage & Hour Service Charge Incident, you have legal options. For more information check out the Mandatory Service Charge Wage & Hour Class Action Investigation . There, you can submit your claim for a free legal review and if it qualifies for legal action, a seasoned service charge lawyer will contact you for a free, no-obligation consultation. You will be guided through the litigation process at no out-of-pocket expenses or hidden fees.  The service charge attorneys working this investigation do not get paid until you do.