COMP NEWS – Utah restaurant Pig & A Jelly Jar recently eliminated tipping, and instead decided to add an 18% service charge onto each customer’s bill. This comes in a slew of numerous restaurants adopting the “hospitality included” (HI) pay model in which tips are replaced by a service charge. Advocates claim that the pay model serves to eliminate some variance in pay that servers experience.

The idea behind HI models is to replace an outdated work-for-tips pay system with a fair and consistent income for service industry employees. The national organization One Fair Wage (OFW), along with lawmakers in some states, are calling for the elimination of the federal subminimum wage of $2.13 for tipped workers, which would require all employers to pay the full minimum wage “with fair, non-discriminatory tips on top.” Other advocates call for the elimination of tips entirely, citing problems like race and gender income gaps, pay inequality between the front and back-of-house staff, sexual harassment, and income insecurity.

Opponents of the HI model claim that it may remove the incentive for employees to provide exceptional service, as their tips are guaranteed before the food is served.

Posted comments range from somewhat understanding to seething: “We were not informed of the service fee but noticed it afterward.” “Food was good ― no complaints there.  However, if you are going to charge a mandatory 18% gratuity, maybe provide some actual service.” “Why am I paying for my food before I get it and you are charging me mandatory gratuity that the restaurant chooses? Huge turn off. No incentive for the staff to do a good job if they have a tip before they’ve earned it.” “I believe tips are to be earned, not just mandatorily given regardless of how good or bad service is, and for that reason this place has lost my business indefinitely.”

This type of policy is also liable to upset some employees who feel that they could be making more in a restaurant without a no-tip policy.

A current employee anonymously stated that having to constantly explain the fee to upset customers is frustrating. They do appreciate having a consistent paycheck and some paid holidays off, but wonder if they would make more money in tips.

Another employee says they definitely make better money working for tips. “I’m hesitant to remain there specifically because of the no tip policy. I understand that tipping has some downsides … I can make a much more ‘livable wage’ because people give me what my service to them was worth.

To read more about the HI pay model, click here.

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