Why More And More Restaurants May Be Adding Service Fees To Your Bill
It's famously tough to work as a server. Finnicky customers are only half the battle — it's the unsteady and often barely-livable wage that hits the hardest. Now, with U.S. inflation up a whopping 8.5% in 2022, service workers are feeling the heat. Recently, several restaurants have been trying to help offset the effect on servers' wallets — but the way they've been going about it has raised a few eyebrows.
Many restaurants have been implementing additional service fees on customer bills, reports the Los Angeles Times. That mystery charge (usually around 3%, per the news outlet) is a fee designed to go straight to servers, but the gray area between this charge and tips is difficult to differentiate. The service charge is meant to be put towards benefits like health care and basic insurance, but is definitely not in lieu of tips.
According to Larkin Hoffman law firm, a mandatory charge cannot be considered a gratuity if customers are given "clear and conspicuous notice" of the charge and its purpose. However, this puts servers and customers in a social situation that is... awkward, at best. One restaurant-goer describes a recent interaction in which their server brought the bill at the end of a meal and stated outright that "a 20% service fee was added to cover her benefits and health insurance, but that it was not a tip," via MarketWatch. This exchange puts all parties in an unsavory scene.
Tip your servers
The argument for additional service fees is that servers should be paid better (and we agree), but employers are expecting that money to come from customers rather than from their own pockets. In 2022, the national average annual wage for servers was only $19,524, per Salary.com. If a person worked full-time (40 hours/week) and didn't take a single vacation or sick day, this would equate to an hourly rate of about $9.39. Federal minimum wage has remained a solid $7.25 for the last 12 years, reports Drexel University, and it has never been livable. In those 12 years, inflation has gone up 32.58% –- $1.33 in 2022 has the buying power of $1 in 2010.
Admittedly, 2020 was infamously tough for the restaurant industry. While several new eateries got their start during the dry spell, 17% of all restaurants in the U.S. permanently shut down since the start of the Coronavirus pandemic, per Bloomberg. Now, in 2022, food inflation is on the rise and adds even more pressure to restaurant owners. Plus, since the pandemic, people are eating out less than ever, says NPR.
So, what's the solution? Many restaurants have started implementing an automatic 20% gratuity that goes right to servers, per 20 Something Finance. But, this mandatory service charge falls into a different category entirely — and it's not unusual for employers to tax employee tips. (Even popular business payment platform Paychex will tell you so).
The point is: Tip your servers well.